GBP/USD recovers from two-year lows after PMI data, still below 1.1800

  • GBP/USD no clear direction after mixed UK PMI data.
  • The US dollar loses strength due to stabilization in Treasury bonds and stock markets.
  • Outlook for GBP/USD remains negative and closing below 1.1760 would be critical.

GBP/USD is struggling once again to extend the recovery while holding below the 1.1800 level, following the release of a mixed S&P Global PMI report on activity in August from the UK.

The activity index in the services sector remained close to 52.6 in July, while the manufacturing component fell to 46.0 from 52.1, reaching the lowest since May 2020. The PMI data from Germany and the Eurozone offered some encouragement. support to the euro and also contributed to give support to the GBP/USD.

The dollar fell from a 19-year high amid a pullback in Treasury yields. Also in the face of possible profit-taking and in advance of economic data, including PMI and home sales. If the cautious climate in the markets continues, the dollar could continue to benefit.

For its part, the pound remains exposed to the situation of the British economy in deceleration, with high inflation and energy crisis and political concerns.

As seen on the GBP/USD daily chart, the price is holding on to the critical support line at 1.1760. A daily close below the latter is needed to consolidate the ongoing downtrend towards the falling trend line support at 1.1565. The 14-day Relative Strength Index (RSI) has stopped its decline but is just above oversold territory, suggesting that the bearish scenario remains more convincing. Furthermore, the 21-day moving average has cut above the 50, which represents a bearish crossover and adds credibility to the downside potential.

GBP/USD day chart

If the buyers manage to take out the 1.1800 figure, a retest of Monday’s high at 1.1838 cannot be ruled out. Above the latter, new buying opportunities will emerge, exposing the psychological barrier at 1.1850.

Technical levels

GBP/USD

Panorama
Last Price Today 1.1776
Today’s Daily Change 0.0010
Today’s Daily Change % 0.08
Today’s Daily Opening 1.1766
Trends
20 Daily SMA 1.2088
50 Daily SMA 1.2081
100 Daily SMA 1.2355
200 Daily SMA 1.2868
levels
Previous Daily High 1.1838
Previous Daily Minimum 1.1742
Previous Maximum Weekly 1.2148
Previous Weekly Minimum 1.1792
Monthly Prior Maximum 1.2246
Previous Monthly Minimum 1,176
Daily Fibonacci 38.2% 1.1779
Daily Fibonacci 61.8% 1.1802
Daily Pivot Point S1 1.1726
Daily Pivot Point S2 1.1686
Daily Pivot Point S3 1.1629
Daily Pivot Point R1 1.1822
Daily Pivot Point R2 1.1878
Daily Pivot Point R3 1.1918

Source: Fx Street

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