GBP/USD: Current 1.5590 (Sunday, Aug 14, 2010).
 
Outlook: More downward correction expected.

Please refer daily charts and not short-term charts e.g. hourly charts.

Fundamentals (Recent economic releases):

1. UK: RICS House Prices Balance release quite negative as compared to the previous release as well as the expectations.
2. UK: Total Trade Balance report positive as compared to the previous release as well as the expectations.
3. UK: Nationwide Consumer Confidence fell and the report was negative as compared to the previous release as well as the expectations.
4. UK: Jobless Change release much poorer as compared to the previous release as well as the expectations.

5. US: Monthly Budget Statement release though slightly better than the expectations but much less as compared to the previous release.
6. US: Consumer Price Index (CPI) data better than previous release.
7. US: Retail Sales releases showed less than expected data but much better than the previous releases.
8. US: Economists at Morgan Stanley reduced their estimate for third-quarter consumer spending (Consumer Spending: 70% of the US economy).
9. US: unemployment rate close to a 26-year high.

Technicals and market perception:

3. ADX: +DI line crossed below –DI line and ADX over 35..
4. Ichimoku cloud: GBP/USD broke below the resistances of Tenkan-Sen and Kijun-Sen after long.
5. Daily MACD line crossed below the signal line.

Analysis/Outlook:  GBP/USD had got a resistance just below a psychological level of 1.6000 and fell sharply after staying in a volatile sideways mode. We expect a further move downward towards 1.5540/5520. We would be watching for a break below 1.5520. In case it happens then we would expect a downward move towards the Fibonacci retracement level 1 (38.2%) of the upward move between May 20th to August 8th i.e. towards 1.5320. A break below that should take GBP/USD to the Fibonacci retracement level 2 (50%) i.e. 1.5114.
 
Overall our near-term outlook is neutral but we expect further downward correction as mentioned above.  A break below 1.5100 will make our near-term outlook bearish and we would expect further fall.

On the upside our outlook will only turn bullish if GBP/USD manages a break above 1.6000 resistance. In case GBP/USD manages it then it should take this currency pair toward s 1.6450 resistance level.

Approach: We will be short-selling with tight stop losses at upward corrections. Our take-profit targets will be for the support levels as mentioned above.

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For short term Forex trades, please refer to daily technical analysis for GBP/USD. 

(Please note that the color (colour) codes used to show outlook are for the currency pairs and not any individual currency)