GBPUSD

Friday’s sell-off saw the GBP/USD pair drop to a intraday low of 1.4171, before trimming losses slightly to end the day around 1.4221 levels. Higher US wage growth figures helped the dollar bulls flex their muscles and the Cable became a victim, given the background of Brexit fears and not so impressive UK manufacturing PMI data release.

Pair’s attempt to retake Friday’s losses quickly ran out of steam in Asia around 10-DMA level of 1.4240 and the bird is now hovering around 1.4213 levels; down 0.10% on the day.

Eyes UK construction PMI

Construction PMI (seen at 54.00, prev 54.2) is likely to show the pace of expansion in the activity was largely unchanged in March. It is worth noting that last week’s upward revision in the UK GDP was mainly due to construction sector performance. Hence, a dismal figure today could weigh over GBP and open doors for a drop to rising trend line support at 1.4145. On the contrary, a sharp rise in the PMI may help Cable take out 50-DMA hurdle of 1.4277.

Technicals – eyes rising trend line support

  • GBP’s exhaustion near inverse head and shoulder neckline followed by a daily closing below 50-DMA indicates the pair is heading to rising trend line (black) support at 1.4145.

  • A break below the same would indicate a short-term top is in place at 1.4460.

  • Bears should watch out for a rebound from 1.4145 followed by a break above 1.4164 (23.6% of 1.5230-1.3835) as that could trigger a fresh rally towards 50-DMA of 1.4277.

  • Above 50-DMA, doors will be opened for a re-test of 1.4330 (23.6% of 1.5930-1.3835).a


 

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