GBP/USD Forecast: Recovery stalling at a critical Fibonacci level

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3728

The August UK August Markit PMIs came in mixed, decelerating from July’s final readings.
Demand for high-yielding assets benefited the pound, despite discouraging UK data.
GBP/USD has room to extend its gains once it clearly breaks above 1.3730.

The British Pound was among the most benefited currencies from the broad dollar’s weakness, with GBP/USD recovering up to 1.3732 and finishing the day nearby. Buyers ignored mixed UK data, as the August Markit Manufacturing PMI printed 60.1 while the services Index came in at 55.5, the latter missing expectations and well below the previous one.

The solid performance of Wall Street was attributed to concerns related to the spread of the Delta variant in the US, suggesting the Federal Reserve would not be able to trim facilities in the near term. Softer than anticipated data reinforced the idea, keeping equities afloat and the greenback under pressure. The UK macroeconomic calendar has nothing relevant to offer this week.

GBP/USD short-term technical outlook

The GBP/USD pair trades a few pips below the 61.8% retracement of its July rally at 1.3730, the immediate resistance level. The near-term is mildly bullish, as the pair has moved well above a still bearish 20 SMA, although still well below bearish longer ones. Meanwhile, technical indicators have crossed into positive territory but quickly lost bullish strength. A clear break above the mentioned Fibonacci resistance level should open the door for a steeper recovery.

Support levels: 1.3675 1.3620 1.3560

Resistance levels: 1.3730 1.3780 1.3825

View Live Chart for the GBP/USD

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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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