GBP/USD revisits 23.6% Fibo level

Broad based USD weakness in Asia pushed GBP/USD pair higher to 1.3315, which is 23.6% Fibo of Brexit day high and post Brexit low.

Awaits UK trade data

UK trade balance number for the month of July is due for release later today. Investors would be interested to see if the sharp slide in Pound has pushed up the exports and help improve the deficit or we going to see worsening of the trade deficit as ‘J curve’ theory states.

‘J curve’ theory says that following a sharp devaluation of the currency, the country’s trade balance initially worsens before foreign consumer’s start responding to improvement in their purchasing power.

The trade figures, if better-than-expected, would add to evidence that there is no Brexit-led gloom and doom.

GBP/USD Technical Levels

The spot currently hovers around 1.3320. Acceptance above 1.3363 (50% Fibo expansion of Nov 07 high – Jan 09 low –Jul 14 high) could yield a re-test of 1.3445 (Tuesday’s high). On the lower side, failure to hold above 1.3315 (23.6% Fibo) would shift risk in favor of a much deeper sell-off to 1.32 handle.