100 hour MA at 1.5393
The GBPUSD extended the narrow trading range in the NY session. The push lower has sent the price to the 1.5400 level which was near the high from Tuesday. Yesterday, the price broke above this level on the employment and BOE meeting minute surge. The high from yesterday banged against the upside trend line resistance and rotated quickly to the downside (see chart below). Today the action was more deliberate and methodical. However, the better initial claims, and an overall dollar bullish, did send the pair to the downside in early NY trading (low came in at 1.54029). It has since recovered (trading around the 1.5430 currently).
Although lower on the day, there are a number of support levels on the downside that the market will have to breach to interrupt what has been a bullish run higher for the pair. In addition to the 1.5400 level. The 100 hour moving average currently comes in at 1.5393. The lower trend line connecting most recent lows comes in at 1.5380. The 38.2% retracement of the move up from the February 10 low comes in at 1.53705.
Further down the bearish road is the 200 hour moving average (green line in the chart below). That level is approaching the 50% retracement at the 1.5337 level. The price for the GBPUSD has not traded below the 200 hour moving average since February 3 when it broke above at 1.5077.
Looking at the 5 minute chart, with the price back toward the 1.5430 level, this was a lower floor before the extension lower. I would expect that sellers should enter in this area, with a stop above the 100 and 200 bar moving averages (blue and green lines in the chart below).
The GBP has been a stronger currency of late - helped by the expectations that the UK is more likely to raise rates sooner relatively. Weak-ish US data (sans the US employment report), has also helped contribute to a more bullish bias. Today's initial claims took some sting out of the weaker US data. The Philadelphia Fed business Outlook index will be released at 10 AM along with the Leading index. Note that the Philly index can be quite volatile. In November the index came out at 40.8 vs 18.5 estimate. In December the index fell sharply to 24.5. Last month, the expectations was for 18.7 and it came in at 6.3. So be aware of a shock. The expectations is for 9.0. A stronger number on the back of the initial claims number, should help to keep the dollar supported (despite the volatility in the series). A weaker number would imply something near the zero line for this index. That would not be taken too well by the dollar. The Leading index, never gets much attention.
