The pound sterling has remained bullish since the beginning of the month. At first, it looked like a simple rebound after a collapse. As it turns out, speculative excitement fueled the sterling.
The US macroeconomic data has boosted the British currency. Industrial production growth in the country slowed to 4.6% versus 5.7%. On top of that, the previous result was revised downwards from 5.9%.
Consequently, industrial output plunged more than expected. The reading was forecast to drop to 5.7% from 5.9%. We can still see industrial production growing on an annual basis.
Meanwhile, the indicator contracted by 1.3% monthly, missing market expectations of a 0.3% rise. That is why a protracted correction comes as no surprise.
The greenback could face pressure today amid a 1.6% drop in housing starts in the United States. In addition, building permits tumbled 7.7% MoM, meaning that housing starts could continue to decline.
Macroeconomic data in the US has recently been disappointing, leading to a weaker US dollar.
Technical View
The corrective move in GBP/USD slowed near the swing high as of Oct. 23. As a result, the volume of long positions decreased, and the price bounced to 1.3708.
If the pair fails to consolidate below 1.3700, we can assume that the volume of short positions is insufficient to reverse the trend.
The Relative Strength Index (RSI) moves within line 70 on the 4-hour chart, signaling long positions build up.
The price tested the 38.2% retracement level from bottom to top. The 50.0% level lies around 1.3830.
Despite the corrective move, the market remains bearish, confirmed by the downward trend that started in early June.
Outlook
We can assume that the next resistance level lies in the 1.3800/1.3830 range, where the volume of long positions is likely to decrease. Consequently, this may lead to the end of the corrective move.
In terms of complex indicator analysis, technical indicators are signaling to buy the pair for short-term and intraday trading as the price is within the swing high of the corrective move.