British trade balance came out better than expected and gave GBP/USD the needed boost to settle above the important technical barrier. What’s next for this volatile currency?
British trade balance showed a deficit of 6.3 billion pounds in February. This was significantly better than the deficit of 7.3 billion that was expected and far better than the result last month – 8 billion deficit. This is the lowest deficit since August.
This surprise sent GBP/USD higher, above 1.54 once again. At the start of the week, the Pound followed the Euro and enjoyed the good news about the Greek crisis It began the week with a big Sunday gap -it traded at 1.5430, about 50 pips above the close and continued forward to 1.5485, not far from the resistance line of 1.5520. This breakout continued the move on Friday, and it seemed that the Pound’s direction is up.
But after escaping last week’s range trading, the Pound provided volatile trading. GBP/USD fell back down and filled the gap. Towards the release of the trade balance, the pair was testing the critical line of 1.5350 once again. The release gave it the boost to get away from this line.
The rest of the week contains mostly American figures. American trade balance is due soon, followed by American CPI and retail sales on Wednesday. Apart from American indicators, the Pound will move by news towards the British general elections due on May 6th.
GBP/USD technical levels
On the upside, the lines to watch are 1.5520 as a minor resistance line, followed by 1.5833 as a major resistance line. The 1.5833 line proved to be very strong – the failure to break it eventually led to a collapse of the pair.
Looking down, a drop below 1.5350 will lead to test the 1.5110 line, which supported the Pound recently. Further below, 1.4780 is the 2010 low, but it’s quite far now.
Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.