- – The British Pound recently traded near 1.2200 twice against the US Dollar, but failed to break it.
- – It looks like a double bottom pattern is forming near 1.2200, looking at the 4-hours chart of GBP/USD.
- – In the UK, the PMI Construction released by the Chartered Institute of Purchasing & Supply and Markit Economics posted an increase from 52.8 to 54.2 in Dec 2016.
UK Construction PMI
In the UK today, the PMI Construction that shows business conditions in the UK construction sector was released by the Chartered Institute of Purchasing & Supply and Markit Economics.
The market was expecting no change from the last reading of 52.8 in Dec 2016. The result was better than the forecast, as there was an increase from 52.8 to 54.2 in Dec 2016. Commenting on the report, the Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI, Tim Moore, stated “December’s survey data confirmed a solid rebound in UK construction output during the final quarter of 2016. All three main areas of construction activity have started to recover from last summer’s soft patch, but in each case growth remains much weaker than the cyclical peaks seen in 2014”.
Overall, the market trend and sentiment are positive for the British Pound, which may lift it towards 1.2300 against the US Dollar.
GBP/USD Technical Analysis
The British Pound made a couple of downside moves, and tested the 1.2200 support area. The stated level acted as a barrier and prevented downside moves on more than two occasions. So, there is a chance that the GBP/USD is forming a double bottom pattern near the same area.
The pair is already trading higher, and broke a bearish trend line on the 4-hours chart at 1.2250. Moreover, the pair is also above the 38.2% Fib retracement level of the last drop from the 1.2387 high to 1.2200 low.
So, there is a chance that the pair may head towards the 50% Fib retracement level of the last drop from the 1.2387 high to 1.2200 low at 1.2293. If the British Pound buyers remain in charge and the double bottom pattern plays well, there can be more upsides with a possible test of 1.2300-10.Tags: British Pound, GBP/USD Technical Analysis, Pound, UK Construction PMI, US Dollar, USD