• GBP/USD came under intense selling pressure during the early part of the European session.
  • The disappointing release of the UK Services PMI raised doubts about further BoE rate hikes.
  • Some cross-driven weakness further weighed on sterling and contributed to the steep decline.

The GBP/USD pair continued with its struggle to make it through the 1.2600 round-figure mark and witnessed a dramatic turnaround during the early part of the European session on Tuesday. The steep intraday slide dragged spot prices back below the 1.2500 psychological mark, or a fresh daily low in the last hour.

The latest leg of a sudden fall of over 100 pips followed the disappointing release of the UK Services PMI, which showed a sharp deceleration in growth during May. In fact, the Preliminary UK Services Business Activity Index slumped to a 15-month low and arrived at 51.8 versus April’s final readout of 58.9 and 57.3 expected.

Adding to this, the seasonally adjusted S&P Global/CIPS UK Manufacturing PMI dropped to 54.6 in May versus 55.1 expected and April’s final reading of 55.8. The data reaffirmed the Bank of England's gloomy economic outlook and forced investors to scale back bets for any further rate hikes in the near future.

This, along with the UK-EU impasse over the Northern Ireland protocol, weighed heavily on the British pound. Apart from this, the downfall could further be attributed to some cross-driven weakness stemming from a spike in the EUR/GBP cross that followed hawkish comments by the European Central Bank policymakers.

With the latest leg down, the GBP/USD pair reversed the previous day's positive move to a near three-week high and also snapped a three-day winning streak. Some follow-through selling below mid-1.2400s will suggest that the recent bounce from the YTD low has run its course and set the stage for further near-term losses.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2484
Today Daily Change -0.0104
Today Daily Change % -0.83
Today daily open 1.2588
 
Trends
Daily SMA20 1.2427
Daily SMA50 1.2819
Daily SMA100 1.3147
Daily SMA200 1.3355
 
Levels
Previous Daily High 1.2601
Previous Daily Low 1.2479
Previous Weekly High 1.2525
Previous Weekly Low 1.2217
Previous Monthly High 1.3167
Previous Monthly Low 1.2411
Daily Fibonacci 38.2% 1.2555
Daily Fibonacci 61.8% 1.2526
Daily Pivot Point S1 1.2511
Daily Pivot Point S2 1.2434
Daily Pivot Point S3 1.2389
Daily Pivot Point R1 1.2633
Daily Pivot Point R2 1.2678
Daily Pivot Point R3 1.2755

 

 

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