--A sterling move below $1.5626 would be going for $1.5551
--Resistance is in the $1.5922-$1.5626 band
--U.K. economy slid deeper into recession in 1Q than previously thought
Traders say that if you throw a dead cat off the roof it will bounce, but not much.
Just so, the GBP/USD pair, or "cable," is about to land on telltale chart support, and the market reaction, either way, will be illuminating.
After all, we learned earlier Thursday that the U.K. economy is worse off than many observers believed.
The technical clincher will be a sterling test of support at $1.5626. As of this writing, sterling is trading at $1.5660. The intraday low is $1.5637.
Based on charts, a sterling bounce from $1.5626 might test the $1.5922-$1.5626 band, which would be a maximum correction.
The U.K. economy slid deeper into recession in the first quarter than previously thought, official statistics showed Thursday, piling pressure on the government to take new steps to spur growth.
In its second estimate for the first three months of 2012, the Office for National Statistics said gross domestic product shrank 0.3% on the quarter. That compares with a preliminary estimate on April 25 of a 0.2% contraction. In annual terms, first-quarter GDP was revised down from zero growth to a contraction of 0.1%, marking the first year-to-year drop in economic output since the fourth quarter of 2009.
Given the strikes against the U.K. economy, I would say that if sterling ticks by even a whisker below $1.5626 traders should prepare for downtrend to $1.5551.
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