GBP/USD: Further downside in play ahead of UK manufacturing PMI?

Brexit jitters, firmer DXY continue to undermine.
Meanders near 6-week troughs of 1.3743.
Eyes on UK manufacturing PMI ahead of Powell Round 2.

Dhwani Mehta FXStreet

The GBP/USD pair remains better offered so far this Thursday, hovering within a striking distance of six-week lows of 1.3743 amid mounting fears of a ‘Hard Brexit’ and aggressive Fed rate hike prospects.

GBP/USD: Downside opening up towards 1.3606, 100-DMA

The spot recovers a brief dip to multi-week lows but remains exposed to downside risks, as the renewed Brexit jitters continue to weigh on the investors’ minds, especially after the EU outlined the draft agreement a day before, which showed the Union hardened its Brexit stance over the Irish border issue.

Moreover, rising demand for the greenback against its main competitors amid expectations of the faster pace of Fed tightening, following Fed Chair Powell’s optimistic over the US economic outlook, also adds to the weight on Cable.

Looking ahead, the USD dynamics and risk trends will continue to drive the pair ahead of the UK manufacturing PMI release, which is expected to arrive at 55.1 in February versus 55.3 booked last. Also, of note remains a fresh batch of economic releases due on the cards from the US docket while the round 2 of the Fed Chair Powell’s testimony will also hog the limelight later on Thursday.

GBP/USD levels to watch

Valeria Bednarik, Chief Analyst at FXStreet, noted: “Technical readings in the 4 hours chart support additional declines ahead, as the pair is well below all of its moving averages, while technical indicators hold near oversold readings, easing their bearish strength but with no signs of changing course. A key support comes at 1.3764, February monthly low, with a break below it favoring a test of the 1.3700 region during the upcoming sessions. Support levels: 1.3765 1.3730 1.3700. Resistance levels: 1.3915 1.3950 1.3990.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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