- GBP/USD dropped to a fresh weekly low below 1.2700 on Wednesday.
- UK data showed that economic activity in the private sector contracted in August.
- Next technical support for the pair is located at 1.2650.
GBP/USD turned south and dropped to a new weekly low below 1.2700 after spending the Asian session in a tight channel at around 1.2750. Unless the pair manages to reclaim 1.2700, additional losses could be seen in the near term.
Pound Sterling came under heavy selling pressure after the data from the UK highlighted the loss of momentum in the economy. S&P Global/CIPS Manufacturing PMI dropped to 42.5 (flash estimate) in August and the Services PMI slumped to 48.7 from 51.5 in July.
Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.28% | 0.44% | 0.02% | -0.10% | -0.30% | -0.10% | 0.03% | |
| EUR | -0.28% | 0.16% | -0.26% | -0.38% | -0.59% | -0.38% | -0.26% | |
| GBP | -0.44% | -0.16% | -0.43% | -0.55% | -0.75% | -0.55% | -0.42% | |
| CAD | -0.01% | 0.26% | 0.43% | -0.11% | -0.33% | -0.12% | 0.01% | |
| AUD | 0.07% | 0.38% | 0.54% | 0.12% | -0.20% | -0.01% | 0.13% | |
| JPY | 0.31% | 0.57% | 0.74% | 0.33% | 0.21% | 0.17% | 0.32% | |
| NZD | 0.11% | 0.39% | 0.54% | 0.13% | 0.01% | -0.19% | 0.14% | |
| CHF | -0.03% | 0.26% | 0.42% | -0.01% | -0.13% | -0.34% | -0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
According to Reuters, interest rate swaps suggest that markets are pricing in a less than 50% of the Bank of England's terminal rate reaching 6% after the disappointing PMI readings.
Assessing the details of the PMI surveys, “the early PMI survey for August suggests that inflation should moderate further in the months ahead, but also indicates that the fight against inflation is carrying a heavy cost in terms of heightened recession risks," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
"While a further hike in interest rates in September looks to be on the cards, the August PMI data will add to speculation that rates could soon peak," Williamson added.
In the second half of the day, S&P Global PMI data from the US will be looked upon for fresh impetus. Although upbeat PMI figures could provide a boost to the USD, a bullish opening in Wall Street could make it difficult for the currency to preserve its strength. At the time of press, US stock index futures were up between 0.4% and 0.75%.
GBP/USD Technical Analysis
GBP/USD returned within the descending channel and the Relative Strength Index (RSI) indicator on the four-hour chart dropped to 40. 1.2650 (mid-point of the descending channel) aligns as first support before 1.2615 (August 14 low) and 1.2600 (psychological level, static level).
In case GBP/USD recovers back above 1.2700 (upper limit of the descending channel) and starts using that level as support, buyers could show interest. In that scenario, the pair could face stiff resistance in the 1.2740-1.2750 area, where the 20-, 20- and 100-period Simple Moving Averages are located.
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.
Recommended Content
Editors’ Picks
AUD/USD continues to lose ground due to the firmer US Dollar
AUD/USD extended its losses on Monday, possibly due to the Reserve Bank of Australia's less hawkish stance after it decided to keep its interest rate unchanged at 4.35% on Tuesday. Markets were speculating that the RBA might adopt a more hawkish stance, fueled by last week's inflation data, which exceeded expectations.
EUR/USD trades with a bearish bias above 1.0750 ahead of US economic data
EUR/USD trades on a softer note around 1.0770 during the Asian trading hours on Monday. Investors turn to cautious mode and prefer to wait on the sidelines ahead of the US key economic data this week.
Gold price trades on a negative note, eyes on Fedspeak
Gold price loses its recovery momentum on Monday during the Asian session. The hawkish remarks from the Federal Reserve and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower.
Here’s what needs to happen for The Graph price to revisit $0.422
The Graph price consolidation below a key hurdle shows that it is ready for a volatile move. With GRT retesting the upper limit of its rangebound movement, chances of an upside breakout are high.
Inflation and tariffs take center stage in discussions
This week market focus will center around inflation data from the US, the world's largest economy, poised to influence global market sentiment. Overall market sentiment appears optimistic as the potential for a US interest rate cut in September has re-entered the conversation.