The Great Britain Pound (GBP) inched higher against the US Dollar (USD) on Wednesday, increasing the price of GBPUSD to more than 1.4450 following the release of some key economic news. The technical bias still remains slightly bullish because of a Higher High in the recent upside rally but the pair is broadly vulnerable and may resume downside move in short term.
As of this writing, the pair is being traded near 1.4451. A hurdle may be noted near 1.4500, the confluence of psychological number as well as a major horizontal resistance ahead of 1.4669, the swing high of the last major upside rally as demonstrated in the following daily chart.
On the downside, the pair is likely to find a support around 1.4374, the swing low of the recent short-term downside move ahead of 1.4005, the low of last month and a major horizontal support area. The technical bias will remain bullish as long as the 1.4005 support area is intact.
UK Trade Deficit
Britain’s trade deficit climbed to an eight-year high in the first three months of the year in a further sign of the country’s failure to rebalance the economy towards exports. Official statistics show the gap between exports and imports in services and goods widened to £13.3bn in the first quarter, the biggest gap since the start of the financial crisis. While the service sector continues to enjoy a healthy trade surplus, this was not sufficient to counteract the drag from the goods sector. The weak data indicate that net trade weighed down overall economic growth in the first quarter, leaving the slowing recovery once more reliant on the consumer.
Considering the overall technical and fundamental outlook, selling the pair on every short term bounce appears to be a good strategy.