GBP/USD Outlook: Cable cracks key support zone and hits fresh multi-month low

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable dipped to nine-month low (1.2675) on Wednesday, in extension of strong fall in past three days, following downbeat PMI data.
The activity in UK Services sector slowed this month (55.1 current vs 58.8 previous month) and also missed forecast at 56.0, while Manufacturing PMI came slightly above expectations (54.3 vs 54.1 f/c) but also fell from previous month's 55.2.
Both indicators point to loss of momentum in post-lockdown recovery but still showing growth in their sectors, as Britain's economy is recovering from devastating fall in country's GDP in the second quarter (more than 20%).
Fresh weakness emerged below thick daily Ichimoku cloud (cloud base lays at 1.2750), probed below converged 100/200DMA's (1.2724) and cracked pivotal Fibo support at 1.2690 (38.2% of 1.1409/1.3482). Bears need clear break of these supports to spark fresh acceleration lower and extend correction of Mar-Aug 1.1409/1.3482 rally), but may take a breather above key support zone as momentum on daily chart reverses from deep negative territory and stochastic enters oversold zone. Today's action so far stays under cloud base with stronger upticks to be ideally capped by falling daily Tenkan-sen (1.2841) to keep bears intact. Persisting uncertainty over Brexit talks continues to weigh on pound, although some optimistic tones in hopes that the deal was possible, partially compensate negative impact.

Res: 1.2750; 1.2799; 1.2841; 1.2875
Sup: 1.2690; 1.2675; 1.2643; 1.2600

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.2987
2. R2 1.2927
3. R1 1.283
PP 1.277
1. S1 1.2674
2. S2 1.2614
3. S3 1.2517

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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