Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2615.
- Add a stop-loss at 1.2835.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2768 and a take-profit at 1.2800.
- Add a stop-loss at 1.2620.
The GBP/USD pair retreated to the important support at 1.2618 and then bounced back during the American session. The pair was trading at 1.2716, where it has been throughout this month.
Jackson Hole Summit ahead
The GBP/USD pair initially dropped on Wednesday after the relatively weak flash manufacturing and services PMI numbers from the UK. According to S&P, the country’s manufacturing PMI dropped from 45.3 in July to 42.5 in August. This decline was lower than the median estimate of 45.0.
Similarly, the services PMI declined from 51.5 in July to 48.7, worse than the estimated 51. As a result, the composite PMI, which looks at the manufacturing and services sectors, moved to 47.6. A PMI reading of less than 50 is usually a sign that a sector is contracting.
Activity in the US was not good either as the manufacturing and services indices dropped to 47 and 51, respectively. On the positive side, the US published strong new home sales data. Sales jumped from 684k in June to 714k in July, a 4.4% increase even as mortgage rates jumped to a two-decade high.
Looking ahead, there will be important economic data from the US on Thursday as the statistics agency will publish the latest durable goods orders numbers. Economists expect the data to show that durable goods orders fell by 4.0% in July while core orders rose by 0.2%.
The most important catalyst for the GBP/USD will be the Jackson Hole Summit, where Jerome Powell and Andrew Bailey will talk. The two leaders will provide more guidance on what to expect in the coming meetings as signs of a slowdown emerge.
GBP/USD technical analysis
The GBP/USD pair dropped to the important support at 1.2618. This was a notable level since it was the lowest level on August 3rd and August 14th. It also coincided with the 61.8% Fibonacci Retracement level on the 4H chart.
The pair remains below the 50-period moving average while the Relative Strength Index (RSI) moved to the neutral point at 50. Therefore, the pair will likely remain in this range on Thursday as traders wait for the upcoming Jackson Hole meeting.
The key support level to watch will be 1.2618 while the resistance point to watch will be at 1.2800.
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