GBP/USD falls towards 1.2320 after US data and weak UK PMI

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  • GBP/USD hit its daily low following the release of the US S&P Global PMIs.
  • Business activity in the UK reignited recession fears and weakened the GBP.
  • Market expects Bank of England to hike rates 50 basis points on February 2 – RTRS Survey.

The pair GBP/USD falls from 1.2400 and falls towards the 1.2310 zone in the middle of a session of mixed mood, as US stocks fluctuate between bullish and bearish. However, the US dollar (USD) is losing traction and giving ground, limiting the fall of GBP/USD. At time of writing, GBP/USD is trading at 1.2320 after hitting a high of 1.2413.

GBP/USD fell to 1.2260 after better-than-expected US PMIs and weak UK data

Wall Street presents a mixed picture, but it is a matter of time before it turns positive. S&P Global reported that December United States (US) PMIs improved, with Services PMI coming in at 46.6 vs. 44.7 expected, while Manufacturing rose to 46.8 vs. 46.2 estimated. The S&P Global Composite, which measures both indices, rose by 46.6, above the 45 forecast. Although business activity continues to show deterioration in the US economy, the downward trend has moderated somewhat.

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On the other hand, UK business activity disappointed investors, with business activity falling at its fastest rate in two years, according to an S&P Global/CIPS survey. “Weaker-than-expected PMI numbers for January underscore the risk of the UK entering recession,” said Chris Williamson, chief economist at S&P Global.

Meanwhile, a Reuters poll showed that 29 of 42 economists estimate the Bank of England will raise interest rates by 50 basis points to 4% on February 2, while 13 estimate a 25 basis point hike. Also, economists expect a top rate of 4.25%.

GBP/USD Technical Analysis

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Technically, the GBP/USD daily chart suggests that the pair is consolidating around 1.2400, unable to go higher and test the 1.2500 signal. Also, in the last two days, successive lower lows have opened the door for further losses. It should be noted that the GBP/USD pair seems to be forming a double top. However, GBP/USD would need to fall below the January 6 daily low at 1.1841 to confirm its validity.

Key support levels are 1.2300, the 20-day EMA at 1.2222 and 1.2100. On the other hand, GBP/USD key resistance levels are 1.2400, followed by the high of 1.2454 and 1.2500.

GBP/USD

Overview
Last price today 1.2322
today’s daily change -0.0051
today’s daily variation -0.41
today’s daily opening 1.2373
Trends
daily SMA20 1.2159
daily SMA50 1.2123
daily SMA100 1.1732
daily SMA200 1.1975
levels
previous daily high 1.2448
previous daily low 1.2324
Previous Weekly High 1.2436
previous weekly low 1.2169
Previous Monthly High 1.2447
Previous monthly minimum 1.1992
Fibonacci daily 38.2 1.2371
Fibonacci 61.8% daily 1.2401
Daily Pivot Point S1 1.2315
Daily Pivot Point S2 1.2257
Daily Pivot Point S3 1.2191
Daily Pivot Point R1 1,244
Daily Pivot Point R2 1.2506
Daily Pivot Point R3 1.2564

Source: Fx Street

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