- 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
|Today last price||1.2484|
|Today Daily Change||-0.0104|
|Today Daily Change %||-0.83|
|Today daily open||1.2588|
|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|
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.
Follow us on Telegram
Stay updated of all the news
AUD/USD recovers to 0.6700 amid upbeat mood
AUD/USD is battling 0.6700, recovering losses induced by softer Australian monthly inflation data. The US Dollar is struggling to extend the rebound amid a better market mood, as the global banking jitters ease. Focus on US data, Fedspeak.
USD/JPY approaches 132.00 amid BoJ-speak, firmer yields
USD/JPY is holding higher ground, approaching the 132.00 level early Wednesday. The pair is capitalizing on the risk-on mood and higher US Treasury bond yields amid mixed comments from the BoJ policymakers. US housing data next on tap.
Gold to extend choppy trading, awaiting a fresh catalyst Premium
Gold price has paused the previous rebound early Wednesday, as the United States Dollar (USD) seems to have found its feet following a rough start to the week. However, the underlying strength in the US Treasury bond yields so far this week could limit the Gold price advance.
This is how Arbitrum and Optimism are dragging users away from Ethereum
Arbitrum became the highlight of the month as the Layer-2 (L2) blockchain launched its native token, ARB. Since then, the L2 narrative that was once the talking point of 2022 has exploded again.
Unfazed: Confidence edges higher despite banking situation
Consumers may not love the present conditions, but a slightly more upbeat take on where things are headed was enough to give overall confidence a nudge in the right direction in March.