The GBPUSD currency pair is struggling to gain traction as a hoist of economic data is expected from the US this week. The Federal Reserve may raise interest rates once more on Wednesday, which has bolstered the US Dollar. Furthermore, the US economy has shown signs of economic recovery, while the Sterling faces challenges in portraying positive macroeconomic indicators.
Specifically, the Manufacturing and Services PMIs in the UK have declined more than anticipated. The UK’s Manufacturing PMI dropped from 46.5 to 45, falling below the predicted level of 46.1. Additionally, the Services PMI contracted from 53.7 to 51.5, below the expected value of 53. In contrast, the US economy exhibited a rise in its Manufacturing PMI from 46.3 to 49, surpassing the anticipated level of 46.2. However, the Services PMI in the US slowed from 54.4 to 52.4, below the forecasted value of 54.
Technical
The upward trend of the GBPUSD currency pair reversed, with the major resistance at 1.31361 acting as a pivot point for downside momentum. Since crossing below the 50-day moving average, the price action was encouraged to retest lower levels of support, with the current 1.28135 support posing a barrier towards the 1.27531 major support. If downside momentum persists, the currency pair may encourage a breakthrough of this 1.28135 support; however, the slight leg up may encourage the price action to retest the 1.28896 resistance at the 23.60% Fibonacci Level which may pave the way towards the 1.31361 major resistance.
Summary
The GBPUSD currency pair has succumbed to downside pressure due to a recovering US economy against a struggling Sterling. If the downward momentum persists, a breakthrough of the 1.28135 support may pose a barrier towards the 1.27531 major support. However, the slight leg up may encourage the price action to retest the 1.28896 resistance, which may pave the way towards the 1.31361 major resistance.
Sources: TradingView, Reuters
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