GBPUSD: Forex Technical Analysis – Improving UK economic data bullish for GBPUSD

By IFCMarkets

Improving UK economic data bullish for GBPUSD

Accelerating expansion of UK services and manufacturing sectors is bullish for Pound. Will the GBPUSD continue rising?

UK economic data after May 25 GDP report were mostly positive. While the construction purchasing managers index remained steady at 52.5 in May, both the manufacturing and services PMIs rose more than expected. The services sector expansion acceleration was steeper: the services PMI rose to 54 from 52.8 in April. A reading above 50 indicates expansion. Accelerating expansion of business activity is bullish for Pound.

On the daily chart the GBPUSD: D1 has been retracing following the rise to 21-month high in mid-April.

• The Parabolic indicator gives a buy signal.
• The Donchian channel signals no trend yet, it is flat.
• The MACD indicator is below the signal line and the gap is narrowing, which is a bullish signal.
• The stochastic oscillator has breached into the overbought zone, this is bearish.

We believe the bullish movement will continue after the price breaches above the upper Donchian boundary at 1.3442. A price above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the fractal low at 1.3204. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.3204) without reaching the order (1.3442) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position	Buy
Buy stop	Above 1.3442
Stop loss	Below 1.3204

Market Analysis provided by IFCMarkets