GBP/USD Consolidating Losses After A Strong Decline

Key Highlights

• GBP/USD declined heavily below 1.2000 and 1.1800.
• A major bearish trend line is forming resistance near 1.2060 on the 4-hours chart.
• The UK Manufacturing PMI is likely to dive to 45.0 from 51.7 in March 2020 (Prelim).
• The US Manufacturing PMI might slide to 43.0 from 50.7 in March 2020 (Prelim).

GBP/USD Technical Analysis

This month, the British Pound declined heavily from well above 1.2500 against the US Dollar. GBP/USD broke many key supports near 1.2200 to enter a bearish zone.

Looking at the 4-hours chart, the pair even traded below the 1.1800 support and settled well below the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

A new multi-month low is formed near the 1.1409 and the pair is currently consolidating losses. An initial resistance on the upside is near the 1.1800 and 1.1835 levels.

The 23.6% Fib retracement level of the main decline from the 1.3200 high to 1.1409 low is also near the 1.1832 level. Moreover, there is a major bearish trend line forming resistance near 1.2060 on the same chart.

Therefore, the pair must climb above 1.1800 and 1.1835 to start a decent recovery wave. Besides, a successful close above 1.2060 is needed for a medium term trend change.

If not, there is a risk of more downsides in the near term. An initial support is near the 1.1500 level, below which GBP/USD is likely to dive towards the 1.1320 level.

Looking at EUR/USD, the pair is attempting a short term recovery, but it is facing hurdles near 1.0850 and 1.0900.

Upcoming Economic Releases

• Germany Manufacturing PMI for March 2020 (Preliminary) – Forecast 40.0, versus 48.0 previous.
• Germany’s Services PMI for March 2020 (Preliminary) – Forecast 42.5, versus 52.5 previous.
• Euro Zone Manufacturing PMI March 2020 (Preliminary) – Forecast 39.0, versus 49.2 previous.
• Euro Zone Services PMI for March 2020 (Preliminary) – Forecast 38.4, versus 52.6 previous.
• UK Manufacturing PMI for March 2020 (Preliminary) – Forecast 45.0, versus 51.7 previous.
• UK Services PMI for March 2020 (Preliminary) – Forecast 45.0, versus 53.2 previous.
• US Manufacturing PMI for March 2020 (Preliminary) – Forecast 43.0, versus 50.7 previous.
• US Services PMI for June March (Preliminary) – Forecast 42.0, versus 49.4 previous.