GBP/USD Forecast: Pound's fragility comes into view amid recession fears
GBP/USD has reversed its direction in the European session on Tuesday and dropped below 1.2500, erasing the majority of the gains it registered on Monday. The data from the UK reminded investors of the recession risks in the UK and weighed heavily on the British pound.
The S&P/CIPS Services PMI in May plunged to 51.8 in May's flash estimate from 58.9 in April. This print missed the market expectation of 57.3 by a wide margin. Similarly, the Manufacturing PMI dropped to 54.6 from 55.8 in the same period. Although these figures suggest that the business activity continued to expand at a modest pace in May, the loss of growth momentum is a significant warning sign. Read more...
GBP/USD: Bearish shift after breaking below 1.25
GBP/USD has declined sharply after having tested 1.26. As FXStreet’s Eren Sengezer notes, sellers could retain control if the pair fails to reclaim 1.25.
“Later in the session, the PMI data from the US will be watched closely by market participants. In case these data highlight the diverging US-UK economic outlook, GBP/USD could extend its slide.”
“The ascending trend line coming from mid-May stays intact despite the latest decline and forms significant support at 1.25. With a four-hour close below that level, the pair could push lower toward 1.2450 (static level) and 1.2400 (psychological level, 100-period and 50-period SMAs on the four-hour chart).” Read more...
Breaking: GBP/USD plummets to sub-1.2500 levels amid doubts over further BoE rate hikes
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. Read more...
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