GBPUSD Running Triangle Breakdown
Spot remains on the defensive on Friday, trading back to the 1.3120 area in response to the miserable prints from UK’s Services PMI for the current month and shedding at the same time more than a cent since daily highs near 1.3290. The pair is losing 0.79% at 1.3127 and a break below 1.3061 (low Jul.20) would aim for 1.2849 (low Jul.11) and then 1.2796 (2016 low Jun.24). On the flip side, the next hurdle aligns at 1.3287 (high Jul.22) followed by 1.3321 (23.6% Fibo of 1.5020-1.2796) and finally 1.3481 (high Jul.15) (GBPUSD Daily Technical Analysis).
GBPUSD Long Price Level
Recently released manufacturing and services GBP news is pushing the pair back down to the lower edge of its intermediate range at around 1.3070. The 1.3000 price level which exists slightly below the range was very well respected by price both from the long and short side toward the beginning of July, forming a cup pattern. In addition, a trend line is lining up sharply with this level. This is an important zone as it present both a short-term and long-term pivot. The ultimate direction of the pair will most likely be determined around this point. Any long initiated on Friday should only be considered a scalp. Otherwise, this is an important level to consider at next week’s open.
GBPUSD Short Break Trendline
As an exception, the Markit company decided to release the Flash July PMIs for the UK this month, as a consequence of the Brexit. The numbers were extremely disappointing, falling below an already negative expectation and showing that the UK economy contracted at the steepest pace since early 2009. The Services flash PMI fell down to 47.4, from previous 52.3, while the manufacturing sector contracted to 49.1. The Pound plummeted with the news, with the GBPUSD pair shedding over 100 pips from a daily high of 1.3290 (GBPUSD Daily Technical Analysis).
GBPUSD Daily Technical Analysis
A sharp drop in new orders, to 45.5 from 52.3, and a dive in the expectations component of the services PMI, both good leading indicators of the economy, suggest that the pain will continue. Sterling dove over a big figure to a 1.3165 low versus the dollar in the wake of the data release. The flash indicator is based on 80% of responses to the full survey. Final data will be released at the beginning of August.
GBPUSD Again For Long Trade
Cable fell back to the floor of near-term 1.3153/1.3273 range, being hit by weak UK data. Fresh weakness emerged after another failure in attempt to break above near-term congestion and attack initial pivots at 1.3312/19 zone (18 July high / Fibo 23.6% of larger 1.5015/1.2795 fall). Spot accelerated its downside after mixed results from UK’s PMIs showed the manufacturing PMI has surpassed expectations at 49.1 vs. 47.8 forecasted, while the more relevant Services PMI dropped to 47.4, the lowest level since March 2009 (45.5) (GBPUSD Daily Technical Analysis).
The PMI releases are negative for the pound and will ratchet up the pressure on the Bank of England to provide some stimulus measure at their next meeting a week on Thursday. Sterling was trading higher on the day heading into the release but has since sharply reversed, with the GBPUSD down approximately 100 pips in the 15 minutes following the announcement. The impressive recovery seen in the FTSE 100 since the panic-selling the day after the Brexit vote can be explained in part by the weakness in the pound.