GBP/USD extends the previous day's rejection slide from the 1.2665-70 supply zone as the pound is further pressured by softer-than-expected UK monthly GDP report for May. The cable could accelerate its slump below the 1.25 level, FXStreet’s Haresh Menghani briefs.
Key quotes
“According to the Office for National Statistics (ONS), the British economy recorded a modest growth of 1.8% in May as compared to consensus estimates pointing to a reading of +5% and the historic fall of 20.3% recorded in April. The ONS also published manufacturing production data, which recorded an unexpected growth of 8.4% in May. Adding to this, the total industrial output matched consensus estimates and showed a growth of 6.0% in May, albeit did little to impress the GBP bulls.”
“The overnight fall dragged the cable below confluence support comprising of 100-hour SMA and a three-day-old ascending trend-line. The subsequent weakness supports prospects for additional weakness, though bearish traders are likely to wait for some follow-through selling below the 1.2500 mark. The pair might then accelerate the fall further towards 100-day SMA support, currently near the 1.2425 region.”
“On the flip side, the immediate hurdle is now pegged near the 1.2545-50 region. Any attempted positive move beyond the mentioned area is likely to confront a stiff resistance, rather remain capped near the confluence support breakpoint, around the 1.2590-1.2600 region. That said, some follow-through buying might trigger a short-covering move and lift the pair back towards the 1.2665-75 strong horizontal resistance.”
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