The pair continues falling amid a significant weakness of the Pound, which remains under pressure due to the possibility of UK’s exit from the European Union. Additional pressure to the pair is giving the strengthening US Dollar, which received a substantial support after the publication of strong US data on the GDP for the fourth quarter of 2015, Reuters/Michigan Consumer Sentiment Index and Personal Spending.
This week attention needs to be paid to data on Markit PMI’s for Manufacturing, Construction and Services sectors in the UK, and to data on the labour market, construction sector and Factory Orders from the US.
Support and resistance
In the medium-term, the pair is expected to remain in the range between the levels of 1.3500 and 1.4000. In the short-term, it could consolidate at the lower border of a descending channel near the levels of 1.3780 and 1.3740, a breakdown of which would open the way towards 1.3630, 1.3550. There is also a possibility of a further fall to the level of 1.3000.
Technical indicators suggest a fall continuation.
Support levels: 1.3825, 1.3780, 1.3740, 1.3700, 1.3630, 1.3600, 1.3550, 1.3500.
Resistance levels: 1.3880, 1.3910, 1.3950, 1.4030, 1.4070, 1.4100, 1.4165, 1.4245, 1.4330.
Short positions can be opened from current levels and from 1.3910, 1.3950, 1.4030 with targets at 1.3740, 1.3500 and stop-loss above the level of 1.4070.