GBP/USD Remains In Major Downtrend Below 1.290004 December, 2018 by Aayush Jindal in Market Analysis
- The British Pound declined recently and broke the 1.2800 support against the US Dollar.
- There is a crucial bearish trend line in place with resistance near 1.2770 on the 4-hours chart of GBP/USD.
- The UK Manufacturing PMI in Nov 2018 increased from 51.1 to 53.1.
- Today, the UK’s Construction PMI for Nov 2018 will be released, which is forecasted to decline from 53.2 to 52.5.
GBPUSD Technical Analysis
During the past few weeks, the British Pound followed a bearish path from the 1.3060 swing high against the US Dollar. The GBP/USD pair recently broke 1.2900 and 1.2800 to enter a major bearish zone.
Looking at the 4-hours chart, the pair earlier recovered nicely from the 1.2692 swing low to 1.3174. Later, it failed to stay in a positive zone and started a solid downward move.
The pair declined steadily and formed many swing highs near 1.3060, 1.2940, 1.2840 and 1.2800. The decline was such that the pair is now well below 1.2900 and the 200 simple moving average (green, 4-hours).
Sellers pushed the pair below the 76.4% Fib retracement level of the last wave from the 1.2692 swing low to 1.3174 high. If there is a downside break below the 1.2680-90 zone, the pair could trade towards the 1.2580 level, which is the 1.236 Fib extension level of the last wave from the 1.2692 swing low to 1.3174 high.
On the upside, there is a crucial bearish trend line in place with resistance near 1.2770. However, a proper close above the 1.2900 level and the 100 simple moving average (red, 4-hours) is needed for a solid rebound in the near term.
Fundamentally, the UK Manufacturing PMI for Nov 2018 was recently released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was looking for an increase from 51.1 to 51.8.
The result was better as there was an increase in the UK Manufacturing PMI from the last reading of 51.1 to 53.1. However, it failed to help GBP/USD as the pair remained under pressure below 1.2800.
Economic Releases to Watch Today
- UK’s Construction PMI for Nov 2018 – Forecast 52.5, versus 53.2 previous.
- Euro Zone PPI for Oct 2018 (YoY) – Forecast +4.5%, versus +4.5% previous.
- Euro Zone PPI for Oct 2018 (MoM) – Forecast +0.5%, versus +0.5% previous.
- US IBD/TIPP Economic Optimism Index for Dec 2018 (MoM) – Forecast 57.3, versus 56.4 previous.