The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of GBPUSD to less than 1.4150 following the release of some key economic news. The technical bias remains bearish because of a Lower High in the recent upside rally.
Technical Analysis
As of this writing, the pair is being traded near 1.4144. A support may be noted near 1.4114, a major horizontal support as demonstrated in the following daily chart. A break and daily closing below the 1.4114 support area could incite renewed selling pressure, validating a move below the 1.4052 support area.
On the upside, the pair is likely to face a hurdle near 1.4321, the high of the recent short-term rally on the four-hour timeframe ahead of 1.4459, the swing high of the last major upside rally. The technical bias will remain bearish as long as the 1.4459 resistance area is intact.
US Services Sector Expands
The U.S. economy’s service sector expanded in March, a signal that business conditions are moving at a positive pace, according to an industry report released on Tuesday. The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to 54.5 from 53.4 the month before. The reading was just above expectations of 54.0 from a Reuters poll of 74 economists. A reading above 50 indicates expansion in the service sector and a reading below 50 indicates contraction.
Trade Idea
Considering the overall technical and fundamental analysis, buying the pair near the above mentioned support levels appears to be a good strategy in short to medium term if we get a valid bullish reversal candle on the daily chart.
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