On Tuesday, GBP erased its earlier gains and weakened against AUD and CAD but held some of its gains against NZD and JPY. Investors will now be looking for the key release from this week's UK economic calendar, second estimate of UK economic growth for the fourth-quarter of 2014, scheduled on Thursday.
Meanwhile, here is a technical update on GBPNZD, GBPAUD, GBPCAD and GBPJPY.
Following its sharp recovery from the lows tested in early January, the pair seems to witness some corrective move and is now trading within a short-term descending channel. However, when the short-term descending channel is taken together with its sharp up-move it seems to form a bullish Flag pattern, suggesting a possible resumption of an up-move in the near-term. The pair currently is hovering around an important confluence area near 2.0540-70 area, comprising of 50-day SMA, 100-day SMA and 23.6% Fib. retracement level of Jan.-Feb. 2015 up-swing. Should the pair start trading above this confluence resistance, it seems to extend the strength initially towards 2.0700 resistance area and further towards the upper trend-line resistance of the descending channel near 2.0800 level. A clear strength above 2.0800 mark opens the room for continuing the upward trajectory towards a very important resistance near 2.1040-50 area, marking multi-year high touched in Nov. 2011, May 2012 and Sept. 2014. Meanwhile on the downside, 2.0500-470 area followed 2.0400 level seems to protect immediate downside. However, major downside support is pegged near 2.0300-270 area, comprising of 38.2% Fib. retracement level, lower trend-line support of the descending channel and 200-day SMA. Failure to hold this important support seems to trigger a sharp corrective move back towards 2.0150-40 region.
The pair remains in a well-established up-trend as depicted by an ascending trend-channel formation on daily chart. However, the pair is reversing after testing the upper trend-line resistance of the channel, indicating a possible corrective move in the near-term. From current levels, a decisive drop below 1.9600 immediate support, marking 23.6% Fib. retracement level of its up-move from Jan. 2015 low to a multi-year high tested in Feb., is likely to extend the corrective move immediately towards 1.9420-1.9400 support area also coinciding with 38.2% Fib. retracement level. Meanwhile on the upside, 1.9800 mark followed by 1.9880 region seems to act as immediate resistance levels. Further, considering the pair's well-established up-trend a decisive move above 1.9800 now seems to provide the required momentum to lift the pair beyond the very important psychological mark resistance near 2.0000 mark, also coinciding with the upper trend-line resistance of the ascending channel, towards testing 2.0200-20 resistance area.
After testing 1.9550 level, its highest level since Nov. 2008, the pair on Tuesday reversed all of its gains and dropped back below 1.9300 mark. From current levels the pair seems all set to continue witnessing profit taking moves and drop towards testing a very important support near 1.9120-1.9100 area, comprising of the lower trend-line support of a short-term ascending trend-channel and 23.6% Fib. retracement level of Jan. lows to Tuesday's multi-year high upswing. A decisive break below this important support is likely to open room for continuing the corrective move initially towards 1.9000 mark intermediate support and eventually towards another strong support near 1.8800 mark, nearing 38.2% Fib. retracement level. However, should the pair manage to hold the lower trend-line support and resume its upward trajectory to clear its immediate resistance levels near 1.9330 horizontal area and 1.9500 mark, it could easily extend its near-term upward trajectory towards testing 1.9900 resistance area.
The rebound from an important support confluence near 176.00 level, comprising of 200-day SMA and 61.8% Fib. retracement level of Oct. to Dec. 2014 up-leg, now seems to face stiff resistance near 184.50-60 region, representing 23.6% Fib. retracement level. Sustained strength above 184.50 level seems to boost the pair immediately towards 187.30-50 horizontal resistance. Alternatively, reversal from current resistance level and a subsequent drop back below 183.50-40 horizontal support is likely to force the pair back towards testing 181.50-40 immediate important support comprising of 38.2% Fib. retracement level and 50-day SMA. Further, a decisive break back below 50-day SMA might now trigger some near-term bearish move for the pair, possibly back towards 177.00-176.70 support area with 50% Fib. retracement level near 179.00-178.80 zone acting as intermediate support.
Senior Market Analyst
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