GBP/USD continues retreat from 1.5500 resistance

<p>GBP/USD continued to retreat from the key 1.5500 resistance level on Thursday as sterling gave back all of its gains from earlier in the day […]</p>

GBP/USD continued to retreat from the key 1.5500 resistance level on Thursday as sterling gave back all of its gains from earlier in the day and the dollar surged on some renewed speculation over a potential Fed rate hike before the end of the year.

Early on Thursday, GBP/USD spiked to a high of 1.5506 after better-than-expected retail sales data coming out of the UK pushed the currency pair up to that key resistance level. The gains were short-lived, however, as the dollar dominated against most other currencies after US unemployment claims for last week came out lower (better) than expected, while the euro plunged after ECB President Mario Draghi issued dovish comments at the ECB press conference. GBP/USD subsequently fell to hit a low of 1.5368, its lowest level within the past week.

During this past week, the currency pair repeatedly attempted to push above the 1.5500 resistance level, but was unable to sustain its rallies, and retreated on each day.

GBP/USD Daily Chart

 

The rise to 1.5500 resistance began in early October, when GBP/USD bottomed out just above key support at 1.5100. In the process of the rise since then, the currency pair has broken out above a key downtrend resistance line extending back to August’s 1.5800-area highs, as well as both the 50-day and 200-day moving averages. These two moving averages have since converged to the downside, potentially forming a bearish cross (or “death cross”) signal.

In the event that 1.5500 resistance continues to hold, a further retreat should find immediate support around the 1.5350 level, around where the two noted moving averages have also converged. Any further downside move should target key support around 1.5100.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.