*Update GBP/USD Reaches Under 1.6400; Limit Sell at 1.6512

*Update Stop Hit. Volatility continues to be high as shifts in risk sentiment continue.

The pair weakened further into the NY session as concerns over the UK economy and the government debt levels continue to impact the Sterling.

The GfK consumer confidence reading declined to -17 from -13 prior, while net lending to individuals was 0.3 billion, below the previous 0.6 billion. In addition, mortgage approvals, although slightly higher than the previous reading, came in below market estimates of 59K at 57K.

The banking sector in the UK will be one to watch as well as decisions the government may take to support the system. Investors believe UK has more to do in regards to this issue.

Even with downside bias, one has to be aware of the risk sentiment play, where the Dollar gains on risk aversion (lower stocks), and falls on positive market sentiment (higher stocks). Volatility should continue to be particular in this pair.

Ahead, traders will look at Asia markets where the Chinese manufacturing PMI will be released alongside the RBA rate decision.

GBP/USD, has retraced over 200 points from today’s 1.6595 high to trade under the 1.6400 handle.

Although further downside from current levels, 1.6380, is viable, a rebound may ensue from the 1.6360 area.

The near term outlook is bearish and preferred strategy now looks to sell on rallies. If prices reach above 1.6500, traders can look to sell just above the area.

With further downward pressure, the pair finds initial support from current levels at 1.6357.

Following this level, GBP/USD will encounter support at 1.6270 and 1.6200.

From current levels 1.6390, the pair finds resistance at 1.6462, followed by 1.6512 and the 1.6575.

TREND

Near Term: Bearish
Medium Term: Neutral
Long Term: Bullish

Trading levels in play:

Limit Sell @ 1.6512 Targets: T1 1.6470 – T2 1.6210 Risk 1.6598
* After 20 pips profit move stop to entry, take profit at will. Comments will follow if outlook changes.

DISCLAMER: The above post is for information only. Before making your investment decisions please acknowledge that the information provided herein should not be taken without your own individual assessment and extensive investigation, it should not be preempted as your own trading strategies, investment advice and/or trading portfolio.
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