GBP/USD – What’s capping the rally?

GBP/USD is once again stuck at 1.3315 (23.6% of 1.5019-1.2789) after having retreated from the high of 1.3375 despite strong UK services PMI release.

Important levels are at play

The area between 1.33 and 1.3363 includes major technical levels, which are making life difficult for the GBP bulls. The first one is obviously 1.3315 (23.6% Fibo). The other major level is 1.3363 (50% Fibo expansion of Dec 2007 high – Jan 2009 low – July 2014).

The spot did clock a high of 1.3375 post UK services PMI release, but the subsequent retreat marked a failure to hold above 1.3363 (50% Fibo expansion). On a larger scheme of things, the area between 1.3315-1.3370 has proved to be a resistance on at least four occasions.

Moreover, the hurdle remains intact despite the batch of strong UK PMI reports released in last couple of days.

GBP/USD Technical Levels

The spot was last seen trading around 1.3310. Acceptance above 1.3315 (23.6% Fibo retracement) could yield a quick fire rise to 1.3363 (50% Fib expansion). A violation there would open doors for 1.35 handle. On the lower side, breach of 1.3287 (weekly low) could trigger a fresh slide to 1.3143 (weekly 5-MA) and 1.31 handle.