- The price seems heavy as DXY is still bullish.
- Taking out the 1.2620 activates more declines.
- The Jackson Hole Symposium could really shake the markets.
The GBP/USD price continues to slide and has reached 1.2687 as of now. The pair experienced high volatility yesterday, following the release of disappointing economic data from both the UK and the US. However, the short-term outlook remains unclear.
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The UK and the US Flash Manufacturing PMI and Flash Services PMI both missed the market expectations, indicating a slowdown in economic activity. However, the US services sector still showed some resilience, as it remained in the expansion territory, unlike the UK, which slipped into contraction. This gave some support to the greenback, which also benefited from the better-than-expected US New Home Sales, which came in at 714K versus 705K forecasted.
Today, the British pound faced another blow, as the UK CBI Realized Sales plunged to -44 points, much lower than the -25 points anticipated. This suggests a sharp decline in the retail sales volume in August.
Later today, the market participants will be closely watching the US Durable Goods Orders, Core Durable Goods Orders and Jackson Hole Symposium for further clues on the economic recovery and the monetary policy stance. Positive US data could boost the USD further and put more pressure on the GBP/USD pair.
Tomorrow, the Fed Chair Powell and the ECB President Lagarde will deliver their speeches at the Jackson Hole Symposium, which could have a significant impact on the market sentiment and volatility. Traders should be prepared for any surprises and adjust their positions accordingly.
GBP/USD price technical analysis: Rangebound
The GBP/USD pair is stuck in a narrow range, as the market awaits more clarity on the economic and monetary outlook. The pair has been trading between the 1.2792 and 1.2620 levels for the past few days, showing no clear direction. However, some technical signals suggest that the pair could be ready for a bearish breakout soon.
As shown on the H1 chart, the pair has broken below the minor ascending pitchfork, which was supporting the previous uptrend. This indicates a loss of bullish momentum and a possible reversal. The pair has bounced back from the range’s support at 1.2620, but failed to sustain above the broken lower median line (lml) of the pitchfork, which now acts as a resistance. This confirms the bearish scenario and signals a new wave of selling pressure.
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The immediate target for the bears is the 1.2620 level, which is the key support of the range. A decisive break below this level would confirm the bearish breakout and open the door for further declines. The next targets could be 1.2580 and 1.2530, which are previous swing lows.
On the other hand, if the pair manages to stay above the 1.2620 level and forms a false breakout, it could indicate a lack of selling conviction and a possible rebound. In that case, the bulls could aim for the upper boundary of the range at 1.2792, which is also near the upper median line (uml) of the pitchfork. A break above this level would invalidate the bearish scenario and resume the uptrend.
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