GBP/USD Bounces Off $1.2480 – What Could Drive an Uptrend?
Aiswarya Gopan • 1 min read
The GBP/USD pair has gradually recovered from a low of 1.2475 as positive market sentiment has supported risk-sensitive currencies. The cable fell sharply on Tuesday after failing to break through the round level resistance of 1.2600.
GBP/USD was listed on Tuesday amid a drop in the S&P Global Purchase Managers Index (PMI). The UK underperformed on the economic data front, with the Services PMI at 51.8 vs. 57.3 expected and the Manufacturing PMI at 54.6 vs. 55.1 forecasts.
Meanwhile, after a two-day losing streak, the US dollar index (DXY) is oscillating in a minor range of 101.74-101.79 in the early Tokyo session. GBP/USD displayed a bearish reversal after establishing below the critical support level of 102.35. Failing to hold at 19-year highs of 105.00, the asset has given up more than 3% gains in the last eight trading sessions.
According to IHS Markit, the US performed similarly to other countries regarding PMI data. As expected, the Manufacturing PMI came in at 57.5, while the Services PMI remained at 53.5.
Market participants are now concentrating on the release of the Federal Open Market Committee (FOMC) minutes, which will dictate the strategic development behind the Federal Reserve’s announcement of a 50 basis point (bps) interest rate decision (Fed).
GBP/USD Technical Outlook
The GBPUSD pair reached our anticipated target of 1.2590 and now faces solid resistance there, as stochastic begins to lose its negative momentum, supporting the chances of resuming positive trades and attempting to surpass the mentioned level to open the way to the next positive target of 1.2725.
As a result, we will continue to recommend a bullish trend for the foreseeable future while noting that failure to breach 1.2590 will force the price to rebound bearishly and initially visit 1.2420 areas.
Today’s trading range is likely to be between 1.2500 support and 1.2650 resistance. Good luck!