Key Highlights
- The British Pound started a downside move from 1.3280 and declined towards 1.3000 against the US Dollar.
- There is a declining channel formed with resistance at 1.3100 on the 4-hours chart of GBP/USD.
- The US ISM Manufacturing Index for Sep 2018 declined from 61.3 to 59.8.
- Today, the US ISM NY index – Business Conditions Index for Sep 2018 will be released, which is forecasted to decline from 76.5 to 75.8.
GBPUSD Technical Analysis
The British Pound started a fresh downside move from the 1.3298 high against the US Dollar. The GBP/USD pair broke the 1.3250, 1.3180 and 1.3080 support levels to move into a bearish zone.
Looking at the 4-hours chart, the pair faced an increased selling pressure from the intermediate high at 1.3217. It fell sharply and settled below the 1.3080 support and the 100 simple moving average (red, 4-hours).
The pair tested the 1.3000 support and it is currently consolidating losses. It recently corrected above the 23.6% Fib retracement level of the recent decline from the 1.3217 high to 1.3000 swing low.
However, the pair failed to settle above the 100 SMA and the 50% Fib retracement level of the recent decline from the 1.3217 high to 1.3000 swing low. More importantly, there is a declining channel formed with resistance at 1.3100 on the same chart.
If the pair gains traction and breaks the channel resistance, there could be a correction towards the 1.3150 level in the near term.
On the other hand, a downside break below the 1.3000 support may push the price towards the 1.2975 level and the 200 SMA (green, 4-hours). Below the 200 SMA, GBP/USD could even trade towards the 1.2840 support area.
Fundamentally, the US ISM Manufacturing Index for Sep 2018 was released recently. The market was looking for a decline from the last reading of 61.3 to 60.3.
However, the result was disappointing as the ISM Manufacturing Index declined to 59.8. It helped the GBP/USD pair in holding the 1.3000 support, but there is still a risk of more losses in the near term.
Economic Releases to Watch Today
- Euro Zone PPI for August 2018 (YoY) – Forecast +3.8%, versus +4.0% previous.
- Euro Zone PPI for August 2018 (MoM) – Forecast +0.2%, versus +0.4% previous.
- UK’s Construction PMI for Sep 2018 – Forecast 52.5, versus 52.9 previous.
