Pound / Dollar (GBP/USD) remained broadly unchanged after a government report revealed slower than expected growth in the UK during fourth quarter of previous, the pair is likely to extend downside movement till 1.6540, according to technical analysis.
As of this writing, the pair is being traded near 1.6685, almost unchanged from today’s opening. Immediate resistance can be noted near 1.6726, the high of yesterday and a strong horizontal resistance. A break above 1.6730 resistance area shall expose 1.6821, the high of February 17.
On downside, support may be noted around 1.6582, the low of 24 February and 38.2% fib level, a break below 1.6582 shall expose more downside movement up to 1.6535 which is 50% fib level and a major hurdle for beers. It is pertinent to mentioned here that both Relative Strength Index (RSI) and Commodity Channel Index (CCI) are very close to overbought territory which shows considerable downside risk.
A report by Britain’s office of national statistics today showed that the economy grew at 2.7% in the fourth quarter as compared to 1.9% in the same duration of a year before, analysts had predicted an increase of 2.8%, hence Year on Year (YOY) reading missed expectations. However, the economy grew at 0.7% in the last quarter of previous year compared with 0.8% growth in a quarter before, Quarter on Quarter (QoQ) reading was in line with market expectations.
Meanwhile, total business investment in UK rose to 8.5% in the fourth quarter as compared to 5.3% decline in the same duration of a year before. Business investment however rose 2.4% — less than expectations – in the fourth quarter compared with 2.0% in a quarter before, market was expecting a 2.6% hike in total business investment. Hence the overall data was negative that might increase selling pressure in cable.