Thanks to weaker than expected U.S. jobs data, GBP/USD breached the 1.5250 minor psychological resistance on Friday and climbed all the way up to the 1.5350 mark. However, price action on Monday reveals that the rally ran out of steam as the pair pulled back during the day.
Currently, GBP/USD seems to be finding support at the former 1.5250 resistance, which is in line with the 38.2% Fibonacci retracement level. At the same time, stochastic has reached the oversold region and is starting to move back up, hinting at a possible rally for today.
U.K. data such as the manufacturing production report and the trade balance could be a catalyst for a rally if the actual figures come in stronger than expected. This would support the BOE’s decision to stay put with monetary policy and would put the U.K. in a better fundamental position compared to the U.S., which has just suffered a slowdown in hiring for March.
If you’re planning to catch the bounce, which has now shown a bit of momentum, make sure to place your stop below the 1.5200 major psychological level as volatility could still spike during the later sessions. Aiming for the 1.5350 previous highs would be good enough for a day trade.
By Kate Curtis from Trader’s Way