- GBP/USD started a major decline after it was rejected near 1.2800.
- A key bearish trend line is forming with resistance near 1.2500 on the 4-hours chart.
- The US Existing Home Sales declined 9.7% in May 2020 (MoM), whereas the market forecast was -3%.
- The UK Manufacturing PMI could increase from 40.7 to 45.0 in June 2020 (Prelim).
GBP/USD Technical Analysis
Earlier this month, the British Pound rallied towards 1.2800 against the US Dollar. GBP/USD failed to continue above 1.2800 and started a major decline below 1.2600.
Looking at the 4-hours chart, the pair traded below many important supports near 1.2500 and the 100 simple moving average (red, 4-hours). It opened the doors for more losses and the pair even broke the 1.2400 support.
Finally, it found support near 1.2340 and it is currently correcting higher. It broke the 23.6% Fib retracement level of the recent decline from the 1.2687 high to 1.2334 low.
On the upside, there is a strong resistance forming near 1.2500, 1.2510, and the 100 simple moving average (red, 4-hours). There is also a key bearish trend line forming with resistance near 1.2500.
Therefore, the pair might struggle to reclaim the 1.2500 zone and it could resume its decline below 1.2340. If the bulls succeed in gaining strength above 1.2500, the pair is likely to surge towards 1.2600 or even 1.2680.
Fundamentally, the US Existing Home Sales report for May 2020 was released by the National Association of Realtors. The market was looking for a 3% decline in sales compared with the previous month.
The actual result was much lower than the forecast, as the US Existing Home Sales declined 9.7% in May (MoM) from April to a seasonally-adjusted annual rate of 3.91 million.
The report added:
The median existing-home price2 for all housing types in May was $284,600, up 2.3% from May 2019 ($278,200), as prices increased in every region.
Overall, GBP/USD is likely to struggle near 1.2500. Conversely, EUR/USD stayed well above 1.1100 and recovered above 1.1200.
Upcoming Economic Releases
- Germany’s Manufacturing PMI for June 2020 (Preliminary) - Forecast 41.5, versus 36.6 previous.
- Germany’s Services PMI for June 2020 (Preliminary) - Forecast 41.6, versus 32.6 previous.
- Euro Zone Manufacturing PMI June 2020 (Preliminary) – Forecast 44.0, versus 39.4 previous.
- Euro Zone Services PMI for June 2020 (Preliminary) – Forecast 40.5, versus 30.5 previous.
- UK Manufacturing PMI for June 2020 (Preliminary) – Forecast 45.0, versus 40.7 previous.
- UK Services PMI for June 2020 (Preliminary) – Forecast 39.5, versus 29.0 previous.
- US Manufacturing PMI for June 2020 (Preliminary) – Forecast 47.8, versus 39.8 previous.
- US Services PMI for June 2020 (Preliminary) – Forecast 46.0, versus 37.5 previous.