The British Pound came down off the highs this morning after the latest economic data releases. UK’s Manufacturing Production contracted at a monthly 0.2% in February against an expectation of an expansion of 0.2%. Industrial Production expanded 0.1% versus an expectation of 0.4%. Additionally, the UK’s trade balance report was released, showing that the deficit shrunk to £10.20 billion, beating expectations. This set of mixed data caused Cable (GBPUSD) to ease off highs at the 1.42 handle. U.S. inflation figures and FOMC minutes out later today will be the catalyst for further moves.
On the 4-hourly chart, the GBPUSD rally is testing the January resistance trend line near 1.4220. If this level is broken, the pair could make further gains to resistance at 1.4245 and then 1.4280. However, a bearish reversal and break of 1.4185 will see downside resistance at the 38.2% retracement level of 1.4125, followed by the 50% retracement and horizontal support at 1.4095.
In the daily timeframe, GBPCAD has reversed from the August 2015 resistance trend line at 1.84. The pair is now testing the 23.6% retracement and horizontal support at 1.7840. If this support holds, a break above 1.80 will likely see a continuation of the bullish trend to resistance at 1.8140 and then the highs at 1.84. On the flip-side, a break of support at 1.7840 will open the way to further declines towards 1.7730 and then 1.7550.