GBP sentiment is very positive after today’s U.K. data. Both Manufacturing Production and Industrial Production increased more than expected. Total production increased by 0.9% between January and February, well above the 0.3% forecast. Manufacturing boasted a 1% increase against the same 0.3% forecast.
Technical Analysis
GBP/CHF was testing the support of an uptrending channel before the data release, with the 50 Simple Moving Average trailing along that line as well. This test formed a higher low at 1.4731, on the 61.8% Fibonacci retracement on the most recent impulsive wave. With a higher low in place the trend remains bullish, so a higher high is up next.
The pair will be aiming towards 1.4862-1.4871, a major confluence between the resistance from February and 61.8% retracement on the downtrend from 1.5122 down to 1.4466. If price will break above 1.4862, the resistance of the channel goes as high as 1.4944, so there is plenty of upside potential.
The bullish trend will be invalidated only if price forms a large negative price action signal against 1.4862 or if the pair crosses below the most recent low at 1.4731.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
