- The recent performance of the GBP/USD currency pair confirms our technical view, which recommends selling the GBP/USD from every rising level.
- Lately, GBP/USD had recovered towards the resistance level of 1.2288 yesterday before returning to stability around the support level of 1.2155 at the time of writing the analysis.
- Therefore, this brings to investors’ minds the possibility of moving towards the psychological support level of 1.2000 again.
British Pound Supported by Data
Technically, the pound sterling rose from its recent lows against the euro and continued its recovery against the US dollar, following the release of some relatively supportive British economic data. Better-than-expected UK Labor market figures were released at 07:00 on Tuesday, followed by the October UK PMI survey at 09:30, where a welcome improvement was recorded in the manufacturing sector.
From a Forex perspective, UK PMIs were more positive than those published by the Eurozone just thirty minutes earlier, as the decline in activity accelerated. Growingly, the UK Manufacturing PMI reached 45.2 in October, higher than the 44.7 reading the market had expected and up from the 44.3 reading in September. Also, the Services PMI read at 49.2, slightly below September's reading of 49.3 and the consensus forecast of 49.3.
The composite figure - which balances results to give a weight representative of the broader economy - came in at 48.6, slightly lower than the expected 48.7 and up from 48.5 in September. Commenting on the data results, Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The British economy continued to avoid a recession in October, with high costs of living, high interest rates and falling exports widely blamed for the third month of declining production.”.
Clearly, this data is consistent with a slowing economy, but from a currency perspective, the miss in forecasts was relatively minor. As mentioned earlier, the October Eurozone PMI report was much worse.
Recently, The British pound rose ahead of the Purchasing Managers' Index (PMI) after some better-than-expected Labor market numbers. The Office for National Statistics released its deferred labor market survey, which showed the country's unemployment rate falling to 4.2% in August. Shortly, this reading provoked expectations for an unchanged reading of 4.3%. therefore, this was helped by lower-than-expected job losses of -82K on a three-month rolling basis in August (vs. -198K expected and a substantial improvement from -207K in July). Moreover, The Office for National Statistics warns that uncertainty when measuring the Labor market is rising as it changes methodology to ensure greater accuracy, so revisions to the data are likely to be made over the coming weeks.
On the sidelines, these data suggest that the Labor market is not deteriorating as quickly as the Bank of England had hoped; Thus, it raises the possibility of a final rate hike of 25 basis points in November or December. This supports the pound and could support the currency near current levels.
GBP/USD Outlook & Forecast
According to the performance on the daily chart below, the general trend of the GBP/USD currency pair is still bearish, and as I mentioned before, stability around the support level of 1.2150 will support a stronger downward move towards the psychological support level of 1.2000, and with it, the technical indicators will move towards strong oversold saturation levels. On the other hand, over the same period, there will be no upward shift in the direction of the currency pair without moving towards the resistance levels of 1.2335 and 1.2500, respectively.
Finally, The pound is not awaiting important British data, and the focus for the currency pair will be on new statements from US Federal Reserve Governor Jerome Powell.
Ready to trade our daily Forex analysis? Check out the best forex trading company in UK worth using.