The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of GBPUSD to less than 1.4300 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 around 1.4295. A support may be noted near 1.4270-80 zone which is a major horizontal support area ahead of 1.4250, the psychological level and then 1.4124, the swing low of the last major downside move as demonstrated in our daily chart.
On the upside, the pair is likely to face a hurdle near 1.4515, the intraday high of yesterday ahead of 1.4667, the swing high of the last major upside rally and then 1.5000, the psychological number. The technical bias will remain bearish as long as the 1.4667 resistance area is intact.
UK Producer Price Index
Factory gate inflation fell in January by slightly more than markets had been expecting. The UK’s producer price index slipped by 0.1% month-on-month and by 1.0% in comparison to a year ago, according to the Office for National Statistics. Analysts had penciled in a drop of 0.2% versus December and a 0.9% decrease versus a year ago. In December, the producer price index fell by 1.4% year-on-year, more than the preliminary estimate from ONS for a decline of 1.2%
Trade Idea
Considering the overall technical and fundamental outlook, buying the pair around current 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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