• GBP/USD has failed to build on Thursday's modest recovery gains.
  • Dollar holds its ground with safe-haven flows continuing to dominate the markets.
  • Focus shifts to ISM Manufacturing PMI data from the US.

GBP/USD has lost its traction and declined toward 1.2100 after having registered modest gains on Thursday. The pair remains technically bearish in the short term and it is likely to extend its slide unless there is a convincing improvement in risk mood.

Month-end flows in the second half of the day on Thursday and softer-than-expected inflation data from the US ramped up market volatility and caused the greenback to lose interest. The US Dollar Index closed the day in negative territory but didn't have a difficult time reversing its direction early Friday. US stock index futures are down between 0.6% and 0.7%, suggesting that investors continue to stay away from risk-sensitive assets ahead of the weekend.

Meanwhile, European Commission Vice President Maroš Šefčovič said that the negative impact of Brexit on the UK economy was "starting to show more clearly." Šefčovič further explained that UK imports of services and goods to the EU were down significantly when compared to 2019 levels.

In the second half of the day, the ISM Manufacturing PMI data from the US will be looked upon for fresh impetus. The headline PMI is expected to edge lower to 55 from 56.1 in May. The Prices Paid component is also forecast to decline to 80.5 from 82.2. In case the report shows that the manufacturing sector is losing growth momentum with price pressures easing, this could be seen as a dollar-negative development and help the pair rebound. On the other hand, an upbeat PMI reading should help the dollar continue to outperform its rivals as it would do little to nothing to change the market pricing of a 75 basis points rate hike in July.

GBP/USD Technical Analysis

Despite the rebound witnessed in the late American session on Thursday, the Relative Strength Index (RSI) indicator stayed below 50 and started to push lower early Friday, suggesting that the pair has completed its correction before the next leg lower. 

On the downside, 1.2100 (static level, psychological level) aligns as immediate support. With a four-hour close below that level, additional losses toward 1.2050 (static level) and 1.2000 (psychological level) could be witnessed.

First resistance is located at 1.2120 (Fibonacci 23.6% retracement of the latest downtrend) ahead of 1.2170 (static level, 20-period SMA) and 1.2200 (Fibonacci 38.2% retracement). 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD falls through 1.0100 amid renewed dollar strength

EUR/USD falls through 1.0100 amid renewed dollar strength

EUR/USD came under heavy bearish pressure, now trading below the 1.0100 level and at its lowest for this month. Although the data from the US showed that Existing Home Sales fell sharply in July, the economy seems resilient to global woes.

EUR/USD News

GBP/USD slumps to multi-week lows and nears 1.1900

GBP/USD slumps to multi-week lows and nears 1.1900

GBP/USD extended its daily slide and touched its weakest level since mid-July in the 1.1920 price zone. The broad-based dollar strength, as reflected by a more than 0.5% increase in the US Dollar Index, forces the pair to continue to stretch lower in the American session.

GBP/USD News

Gold bearish breakout underway

Gold bearish breakout underway

Gold is losing ground for a fourth consecutive day, trading at fresh weekly lows. The metal suffers from renewed dollar strength, as US data suggest the economy remains resilient to the latest global woes, leaving room for the Fed to maintain its aggressive stance.

Gold News

Why XTZ traders need to be glued to the screen for next 48 hours

Why XTZ traders need to be glued to the screen for next 48 hours

Tezos price will likely take a key turn lower today after the bullish print on Wednesday. XTZ price is at the mercy of global markets rolling over this morning. Either the technical support handles hold – or break under dollar pressure.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures