GBP forecast: Indicators of a bullish impetus reversal. Despite positive services PMI, the sterling does not inspire. manufacturing declines further
GBP, GBPUSD Analysis
Despite a positive PMI, the sterling fails to excite. manufacturing drops more
GBP declines after an earlier increase due to higher rate forecasts that now anticipate a 5% peak in UK rates.
A possible bullish breach in the EURGBP is being watched closely ahead of a busy week for EU economic reports.
The same unequal growth noted in the EU report was also apparent in the UK PMI data from S&P Global/CIPS. With services continuing to thrive while manufacturing continues to decrease. As stagflation fears gather hold, a worldwide slowdown in growth combined with the highest inflation in Western Europe presents significant challenges
In reality, food and non-alcoholic drinks continue to put greater strain on the overall level of prices. It is the services sector itself that has caused the most recent elevated CPI figure.
S&P Global/CIPS Report/Data
Technical factors and levels to monitor for the GBPUSD
In addition to consolidating during recent sessions, Pound’s bullish run now looks to be moving in the direction of the most recent bottom. After today’s latest dip.
The strong USD selloff occurred as traders factored in Fed funds rate reductions for the subsequent half of the year. It cannot be isolated from the pair’s increase. Since then, the ‘higher and longer’ theme has reappeared – as the US dollar’s value has been sustained by persistent core inflation and a robust US economy.
The duo is presently trading under the 20-day (SMA), which has served as dynamic support since mid-March. With the last swing bottom of 1.2345 in view. As a result of today’s rejection of higher levels at the zone of resistance (1.2445). 1.2300 then appears as psychological support.
The range of resistance at 1.2445 is the area to watch that would be of most immediate significance. If prices were to move higher from here until heading back to 1.2500 and the latest swing top.
