GBP/USD Forecast: turning bearish again?
|The US Dollar strengthened against most of its major counterparts on Monday and built on last week's recovery move from nine-month lows touched in the aftermath of hawkish comments from the ECB President Mario Draghi and BOE Governor Mark Carney. Upbeat manufacturing data, with the ISM manufacturing PMI jumping to 57.8 for June, supported the recent uptick in the US Treasury bond yields and provided an additional boost to the greenback's rally.
The recovery move, however, lacked any strong follow through momentum amid lingering concerns over the US President Donald Trump’s pro-growth economic policies and subdued trading action in light of the Independence Day holiday in the US.
The pair came under some selling pressure on Monday after a survey showed decelerating manufacturing activity in the UK. The Markit UK manufacturing PMI dropped to a three-month low level of 54.3 in June and May's final reading was also revised lower to 56.3. The eroded nearly 100-pips from Friday's multi-week closing highs near 1.3030 level. Currently hovering around mid-1.2900s, traders now look forward to the release of UK construction PMI for some fresh impetus during European trading session on Tuesday.
Technically, the pair has found some support near 1.2930-25 region marking 23.6% Fibonacci retracement level of 1.2589-1.3030 recent up-swing. Hence, traders are likely wait for a decisive break below this immediate support before positioning themselves for additional near-term corrective slide. Below the said support, the pair is likely to accelerate the fall towards 38.2% Fibonacci retracement level support near 1.2860 level before eventually dropping closer to the 1.2800 handle, also nearing 50% Fibonacci retracement level.
On the upside, 1.2965-70 horizontal level now seems to act as immediate resistance, above which the pair is likely to move back above the key 1.30 psychological mark and make a fresh attempt towards retesting yearly tops resistance near 1.3040-50 region. A follow through buying interest should continue boosting the pair further towards the 1.3100 handle en-route its next major hurdle near 1.3160-65 region, representing 61.8% Fibonacci expansion level of 1.2109-1.3048 latest up-swing and subsequent retracement.
The pair on Monday largely ignored upbeat Euro-zone manufacturing data and corrected back below the 1.1400 handle to multi-day lows. The final Euro-zone manufacturing PMI came-in at a 74-month high level of 57.4 as against the flash estimate of 57.3 and higher than the 57.0 printed in May but did little to provide any additional support to the shared currency.
Monday’s corrective slide dragged the pair below its immediate support near 1.1370 level, marking 23.6% Fibonacci retracement level of the 1.1119-1.1446 recent upsurge and hence, the corrective slide seems more likely to get extended in the near-term. A follow through weakness below mid-1.1300s would confirm the expectations and accelerate the slide towards 38.2% Fibonacci retracement level intermediate support near 1.1320 area before the pair eventually breaks below the 1.1300 handle and aim towards testing 50% Fibonacci retracement level support near 1.2980 level.
On the flip side, any up-move now seems to confront immediate resistance near the 1.1400 handle. Momentum back above the said resistance, leading to a subsequent strength beyond 1.1425 level, now seems to pave way for continuation of the pair’s near-term upward trajectory further towards conquering the key 1.1500 psychological mark ahead of its next major hurdle near 1.1530-35 region.
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