Sellers Getting Ready to Push GBP/USD Below 1.20
GBP/USD has been falling since July and reached its lowest level since March when it plummeted to 1.2040 early in October, however it rebounded for more than a week before topping at 1.2340 the following week. However, the announcement of the US consumer inflation report boosted the USD and sent this pair down, sliding just below 1.21 this week, while stronger UK DCPI inflation did not aid the GBP much.
Moving averages, particularly the 50 SMA (yellow), have been functioning as resistance this week, limiting higher retraces, indicating that selling pressure is strong. The rise in US treasury rates as a result of global concerns has aided the USD while also driving this pair down.
The UK economy’s economic data continues to deteriorate, thus we are preparing to go short on this pair. Today we saw the UK jobs report, as well as the Manufacturing and Services PMI statistics, both of which were pretty poor, as shown below. The headline number is a 9-month low, indicating that overall activity in the services sector will continue to decrease. With both the industrial and service sectors falling, it points to a slow start to Q4 as the UK economy approaches recession.
Everything is changing fast nowadays, so the situation might shift as well, butfor now sellers remain in control. In case there is some sentiment improvement, , there is a dynamic resistance zone at 1.2225 awaiting if prices bottom out and then continue to climb from current levels.
Breaking through this technical barrier may re-energize upward momentum, creating the basis for a move toward 1.2330. With further strength, the focus shifts to 1.2450, which is around the 200-day simple moving average. In case the selling pressure increases, with the uncertainties around the globe being high as we are seeing, then the next suppport would be below 1.21, followed by 1.20.
GBP/USD Live Chart
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