- The downside pressure is high after failing to stay above the median line.
- A new lower low activates more declines.
- The US manufacturing and services data could bring high action.
The GBP/USD price plummeted yesterday as the dollar’s demand grew. The pair is trading at 1.2180, far below Wednesday’s high of 1.2446. After its massive drop, it has tried to rebound, but the pressure remains high, so a downside continuation is favored.
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Fundamentally, the USD took the lead after the FED increased the Federal Funds Rate from 4.00% to 4.50%. Yesterday, the BOE delivered a 50-bps hike as well. However, the GBP/USD pair is bearish in the short term. Surprisingly or not, the pair dropped deeper even though the US data came in mixed in the last secession. The retail sales indicators came in worse than expected.
Today, the manufacturing and services data could bring sharp movements. The UK Flash Services PMI may drop from 48.8 points to 48.5 points confirming further contraction, while Flash Manufacturing PMI may remain steady at 46.5 points.
On the other hand, the US data could be decisive in the short term. The Flash Manufacturing PMI is expected at 47.7 points, while Flash Services PMI could increase from 46.2 points to 46.5 points. Both sectors are expected to remain deep in the contraction territory.
GBP/USD price technical analysis: Rebound seems over
Technically, the GBP/USD price rebounded but failed to stay above the 1.2200 psychological level and turned to the downside again. Stabilizing below the median line (ML) of the descending pitchfork could signal more declines. After its valid breakdown below the uptrend line, the price signaled exhausted buyers.
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Now, the sellers are in full control and could lead the pair towards new lows. The 1.2156 former low represents static support. A new lower low, a valid breakdown below it, may activate more declines. As long as it stays below the median line (ML), the price could be attracted by the lower median line (LML).
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