- The GBP/USD pair is bearish in the short term despite temporary rebounds.
- The UK and US data should move the price.
- A new lower low activates a downside movement.
The GBP/USD price is trading at 1.2018 at the time of writing below yesterday’s high of 1.2056. The price seems undecided in the short term as the traders are waiting for the UK and US data before taking action again.
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The bias is bearish, so the downside pressure remains high. However, a deeper drop needs confirmation. Today, the fundamentals should move the price. The services and manufacturing data should shake all markets. In the short term, the Eurozone data could have an impact as well.
Fundamentally, the UK Flash Services PMI is expected at 49.2 points above 48.7 points in the previous reporting period, while Flash Manufacturing could jump from 47.0 points to 47.5 points.
On the other hand, the US Flash Services PMI could increase from 46.8 to 47.3 points while Flash Manufacturing PMI is expected to climb to 47.5 points from 46.9 points.
Still, despite potentially better data compared to the previous reporting period, the services and manufacturing sectors could remain deep in contraction territory.
In addition, the Canadian inflation data should have a big impact on the USD. The CPI is forecasted to report a 0.7% growth in January, versus the 0.6% drop in the previous reporting period.
GBP/USD price technical analysis: Challenging support at 1.2014
Technically, the price rebounded after its last downside movement. Still, the leg higher could be only temporary. It has reached a supply zone and now it has turned to the downside.
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The GBP/USD pair found resistance at 1.2049 and now challenges the 1.2014 former low which stands as a dynamic support. As long as it stays below the median line (ML), the rate could come back down.
Taking out 1.2014 activates a deeper drop. Also, testing and retesting the median line, registering only false breakouts announces a new sell-off. The lower median line (LML) represents a downside target and obstacle if the rate continues to drop.
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