Key Highlights
- The British Pound failed to climb above 1.3000 and corrected lower against the US Dollar.
- A key bearish trend line is forming with resistance near 1.2960 on the 4-hours chart.
- The UK Construction PMI in Oct 2019 increased from 43.3 to 44.4.
- The US ISM Non-Manufacturing Index is likely to increase to 53.4 in Oct 2019.
GBP/USD Technical Analysis
After finding support near 1.2800, GBP/USD climbed above the 1.2950 resistance. However, the pair failed to climb above 1.3000, formed a high near 1.2975, and recently started a downside correction.
Looking at the 4-hours chart, the pair is clearly facing a couple of key resistances near the 1.2970 and 1.3000 levels. It is currently correcting below the 38.2% Fib retracement level of the upward move from the 1.2788 low to 1.2975 high.
However, there are many supports on the downside near the 1.2880 area. Moreover, the 50% Fib retracement level of the upward move from the 1.2788 low to 1.2975 high is near the 1.2882 level.
If there is a downside break below the 1.2880 support, GBP/USD could decline further towards the 1.2850 support zone. On the upside, the bulls are facing many hurdles near 1.2960, 1.2975, and 1.3000.
More importantly, there is a key bearish trend line is forming with resistance near 1.2960 on the same chart. A successful break above the trend line and a follow through above 1.2975 might push the pair above the 1.3000 resistance.
Fundamentally, the UK Construction PMI for Oct 2019 was released by the Chartered Institute of Purchasing & Supply and Markit Economics. The market was looking for an increase from 43.3 to 44.0.
However, the actual result was above the market forecast, as the UK Construction PMI increased from 43.3 to 44.2, suggesting construction output fell at a slower rate in October.
The report added:
Civil engineering declines at fastest pace since October 2009. New orders and employment continue to decrease. Business expectations for the year ahead remain subdued.
Overall, GBP/USD might correct further towards 1.2880 or 1.2850 before a fresh increase. Similarly, there could be a downside extension in EUR/USD towards 1.1110.
Upcoming Economic Releases
- UK Services PMI for Oct 2019 – Forecast 49.7, versus 49.5 previous.
- US Services PMI for Oct 2019 – Forecast 51, versus 51 previous.
- US ISM Non-Manufacturing Index for Oct 2019 – Forecast 53.4, versus 52.6 previous.
