GBP/USD analysis: poised to extend slump to 1.2880 region

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3028

Conservative Party Conference sees UK PM May struggling to defend her Chequers' plan.
UK growth downwardly revised in Q1, business investment plunged in Q2.

The GBP/USD pair fell down to 1.3000 to close the day 1.3028, its lowest settlement since September 10. The pair edged sharply lower the last two trading days of the week, but ended it with modest losses, as the Pound got undermined by soft GDP data. The final version of the Q2 reading was confirmed a 4% quarterly growth, while Q1 growth was revised down to 0.1%, taking down the annual economic growth to 1.2%, below the 1.3% expected. Total business investment in the three months to June, plunged 0.7% while Q1 reading was revised to -0.5%. Also, the current account deficit for the same period was larger-than-expected, hitting £-20.317B. During Sunday, the Conservative Party Conference saw PM May battling to convince policymakers on her Chequers plan, appealing on her party to unite behind it. At the beginning of the week, Markit will release the UK's September Manufacturing PMI, forecasted at 53.8, up from August 52.8. The kingdom will also release August money figures.

From a technical point of view, the risk of a downward extension has increased, as in the daily chart, the pair broke Friday below a bullish 20 SMA, while technical indicators offer strong downward slopes, entering negative territory for the first time in September. Shorter term, and according to the 4 hours chart, the pair is also technically bearish after closing the day a handful of pips below the 200 EMA, and while technical indicators maintain their downward strength in overbought levels. A break through 1.2970, now the immediate support, could result in a steady decline toward the 1.2880 region, where the pair has the 61.8% retracement of the 2016/18 rally.

Support levels: 1.2970 1.2945 1.2900

Resistance levels: 1.3065 1.3100 1.3140

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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