The 100 Daily SMA Holds in GBP/USD After the Fallout From Services

GBP/USD has slipped lower in the last several week, but the 100 daily SMA is acting as suport while the 50 SMA has turned into resistance

Written by: Skerdian Meta • Thursday, August 24, 2023 • 1 min read

• Last updated: Wednesday, August 23, 2023

GBP/USD stuck between 2 MAs on the daily chart

GBP/USD has been making lower highs since the middle of July, as the situation for the USD improved. The UK economy has shown signs of heading into a recession, as consumer inflation continues to remain high compared to the US, and public sector wages remain stagnant.

As a result, this pair has been making lower highs for more than a month and has fallen between two moving averages. The 100 SMA (green) is acting as support on the daily chart, while the 50 SMA (yellow) is acting as resistance at the top.

Yesterday we saw another deterioration in the UK economic activity after the UK Manufacturing and Services PMI reports for August were released which were quite disappointing for August. The services sector’s performance has deteriorated to the point of entering contraction territory. This adds to the existing economic downturn in the manufacturing sector. The brief expansion of the UK economy lasted only for only six months. As a result of these negative trends, the composite reading of economic activity has now reached its lowest point in 31 months.

UK August Flash Services PMI

August flash services PMI 48.7 points vs 51.0 expected
July services PMI was 51.5 points
Manufacturing PMI for August 42.5 points vs 45.0 expected
Prior manufacturing PMI was 45.3 points
Composite PMI 47.9 points vs 50.3 expected
Prior composite PMI was 50.8 points

GBP/USD slipped more than 100 pips lower after these reports were released, but the 100 SMA held the decline at around 1.2620, which has been acting as support twice before. We saw a rebound of this support zone and the softer PMI readings from the US also helped push the price higher. So, we will follow the price action to see if the 100 SMA will be broken.

GBP/USD Live Chart

GBP/USD

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.