GBP/USD: Daily RSI divergence seen ahead of UK manufacturing PMI release
|- The bullish RSI divergence seen in the daily chart indicates the sell-off from the April 17 high of 1.4377 has likely ended.
- A better-than-expected UK manufacturing data could bolster the early signs of bull reversal.
The GBP/USD jumped 1 percent on Friday and closed above 1.32, validating the positive divergence of the 14-day relative strength index (RSI). At press time, the currency pair is trading at 1.3180.
Focus on UK manufacturing PMI
The UK June manufacturing PMI, due at 08:30 GMT, is expected to show the pace of expansion in the manufacturing activity slowed to 53.5 index points vs 54.4 index points seen in May.
An above-forecast reading would add credence to bullish RSI divergence, however, only a daily close above 1.3315 (June 22 high) would confirm a short-term bearish-to-bullish trend change.
Meanwhile, a below-forecast print would shift risk in favor of a drop to 1.3049 (June 28 low). A close below that level would violate the bullish RSI divergence.
GBP/USD Technical Levels
Resistance: 1.3204 (May 29 low), 1.3315 (June 22 high), 1.3419 (50-day MA).
Support: 1.3157 (5-day MA), 1.3102 (June 21 low), 1.3049 (June 28 low).
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