The key GBP/USD news to watch will be the upcoming US consumer confidence data.
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- Buy it GBP/USD pair and set a profit at 1.2915.
- Add a stop-loss at 1.2775.
- Timeline: 1 day.
- Set sell stop at 1.2790 and take-profit at 1.2700.
- Add stop-loss to 1.2900.
The GBP/USD exchange rate continued to fall after a series of weak manufacturing and services numbers from the UK and the US. The pair retreated to a low of 1.2797, the lowest point since July 10. It has retreated more than 2.3 percent from its highest point this month.
Recent economic figures have shown that the UK economy is slowing as the cost of living crisis escalates. Data released last week showed the country’s inflation fell to 7.9% in June as demand weakened.
Other figures released on Monday showed economic performance worsened in July. The manufacturing PMI fell to 46.5 in July, the lowest level in five months. Most of the manufacturers surveyed said that their business activity is decreasing.
The services sector also fell to 51.3 in July. S&P Global said in a note that business activity in the country is flat as interest rates remain high. The Bank of England (BoE) has moved interest rates from zero to a 15-year high of 5%. And analysts expect the bank to raise rates again this month by 0.25%.
Meanwhile, US PMI numbers showed that the manufacturing sector improved but remained below the expansion zone of 49. The services PMI fell to 52.4, below the average estimate of 54.
The key GBP/USD news to watch will be the upcoming US consumer confidence data. Economists expect the data to show confidence rose from 109.7 in May to 111.5 in June. This is an important number because consumer spending is the largest component of the economy.
The US will also release laatst home price index (HPI) data. The numbers come a day before the Fed’s upcoming interest rate decision.
The GBP/USD exchange rate continued to fall as traders focused on the latest flash manufacturing and services PMI numbers. It fell below the important support level at 1.2845, the June 16 high. Most importantly, the pair retested the uptrend line shown in black. This line connects the lowest levels since May 25th.
The GBP/USD pair has fallen below its 50-period moving average, while the Relative Strength Index (RSI) is hovering near oversold levels. Therefore, the pair is likely to bounce back unless the bears prevail to move below the uptrend line. A bounce will cause it to retest the resistance point at 1.2917.
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