The GBP/USD was unable to continue the upward momentum yesterday and as you can see from the chart, slipped under the bullish channel and is now testing the 1.6850 support area. A clear break below that area could cause subsequent bullish pressure, the testing 1.6800 or lower. Offset soon neutral. On the other hand, there is the key resistance around 1.6900. Confident penetration and consistent traffic over this area can cause subsequent bullish pressure testing 1.7000 psychological level.
According to information received, the index of leading indicators LEI last month increased by 0.4% after rising 1% in March. Economists had expected the index by 0.5%.
Despite the fact that the GBP/USD last week could not exceed the resistance R1, the probability that the maximum level in 2009 will soon be rechecked, still exists. Nevertheless, in order to short-term outlook remains bullish, such as they are now, the key support level of 1.6776 / 35, should remain intact. Moreover, given that the area is in demand at the lower edge of the 14-month rising channel, there is a high probability that it will dispel the pressure of oversupply, at least at the current time.
The number of Americans filing initial claims for jobless benefits for the week from 11 to 17 May increased by 28,000 and reached 326,000. Economists forecast that the number of initial claims for unemployment benefits amount to 310,000.
Technical Analysis
The pair corrected somewhat, but the probability of further recovery towards 1.7040 key resistance remains high. At the same time it is expected that pressure on the pair will intensify already approaching the mark of 1.7000 and a break above 1.7040 could be very difficult. In this likely trend reversal down and reduced to 1.6720-1.6750 support, where the 50-day SMA.
Bears retain a significant advantage over the bulls, which means retaining the negative sentiment against the pound with 64 % of traders are awaiting lag dynamics of sterling against the U.S. dollar.
It is also possible the immediate continuation of a downward correction in the direction of the support. In the future, overcoming the 1.6720-1.6750 area markedly worsen outlook and open the way to a gradual decrease of 100 -day SMA, the support of 1.6465, the 200-day SMA and 1.6200. At the same time, if the pair manages to overcome and to consolidate above 1.7040 resistance, will the space for long-term growth more towards 2.0000.
