The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of GBP/USD to less than 1.6840 following the downbeat economic reports. The sentiment remains bullish due to Higher High in the recent upside rally.
As of this writing, the pair is being traded around 1.6831. A support may be noted around the current level, the 50% fib level ahead of 1.6741, the 61.8% fib level and then 1.6692, the swing low of the recent correction wave as demonstrated in the following chart.
On the upside, the pair is likely to face a hurdle around 1.6913, the 38.2% fib level ahead of 1.7019, the 23.6% fib level and then 1.7191, the swing high of the recent upside rally. The sentiment will remain bullish as far as the 1.6463 support area is intact.
The industrial production of Britain missed the expectations, printing 1.2% reading in June as compared to 2.3% in the month before against the median projection of 1.5%, a government report revealed today. Generally speaking, higher industrial production is considered positive for the economy, hence the downbeat economic report spurred selling pressure in the price of cable.
US Trade Balance
The US economy witnessed $41.54 billion trade deficit in June as compared to $44.66 billion trade deficit in the month before, a report by the US Bureau of Economic Analysis revealed today which exceeded the expectations of $40.77 billion deficit, accelerating the ongoing selling pressure in the price of GBP/USD.
Considering the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy if the price leaves a bullish engulfing or bullish pin bar on the daily chart. The trade should however be stopped out on a daily closing below the 1.6800 handle.