Key Highlights
- GBP/USD failed on more than two occasions to clear 1.3750.
- GBP/JPY surged above the 141.50 and 143.00 resistance levels.
- The UK ISM Manufacturing PMI increased from 52.9 to 54.1 in Jan 2021.
- The US ISM Manufacturing PMI declined from 60.5 to 58.7 in Jan 2021.
GBP/USD Technical Analysis
In the past few days, the British Pound struggled to clear the 1.3750 resistance zone against the US Dollar. GBP/USD is consolidating in a broad range, with a key support near 1.3630.
Looking at the 4-hours chart, the pair faced a strong selling interest near the 1.3750 and 1.3760 levels. A high is formed near 1.3758 and the pair corrected lower. There was a break below 1.3700, but the pair remained well below 1.3630 and 1.3620.
It seems like there is a key support forming near 1.3630 and the 100 simple moving average (red, 4-hours). Any more losses could open the doors for a push towards the 1.3575 level or the 200 simple moving average (green, 4-hours).
On the upside, the pair is clearly facing a major hurdle near 1.3750. A successful close above the 1.3750 resistance level could open the doors for a steady increase towards 1.3840 or even 1.3880.
Fundamentally, the UK Manufacturing PMI for Jan 2021 was released yesterday by both the Chartered Institute of Purchasing & Supply and Markit Economics. The market was looking for no change from 52.9.
The actual result was better than the forecast, as the UK Manufacturing PMI increased from 52.9 to 54.1 in Jan 2021.
The report stated:
The upturn in the UK manufacturing sector slowed sharply at the start of 2021. Output growth eased and new orders fell slightly as producers faced weaker inflows of new export work and temporary supply-chain disruptions caused by COVID-19 restrictions and transport delays (especially at ports) following the end of the Brexit transition period.
Overall, GBP/USD must clear 1.3750 for upside continuation. Besides, EUR/USD is struggling and it could continue to move down towards 1.2000.
Economic Releases
- Euro Zone Gross Domestic Product Q4 2020 (Preliminary) (QoQ) – Forecast -1.2%, versus 12.4% previous.
- Euro Zone Gross Domestic Product Q4 2020 (Preliminary) (YoY) – Forecast -5.4%, versus -4.3% previous.
