Key Highlights
- GBP/USD started an upside correction from the 1.3600 zone.
- A key bearish trend line is forming with resistance near 1.3800 on the 4-hours chart.
- EUR/USD is struggling to clear the main 1.1750 resistance zone.
- The US Manufacturing PMI dipped from 63.4 to 61.2 in August 2021 (Prelim).
GBP/USD Technical Analysis
The British Pound extended its decline to 1.3600 before it started an upside correction against the US Dollar. GBP/USD recovered above 1.3700, but it could face many hurdles.
Looking at the 4-hours chart, the pair was able to clear the 23.6% Fib retracement level of the downward move from the 1.3876 high to 1.3602 low. However, it is still well below the 1.3800 pivot level, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
The first key resistance is near the 1.3740 level. It is close to the 50% Fib retracement level of the downward move from the 1.3876 high to 1.3602 low.
The next major resistance is near the 1.3800 zone. There is also a key bearish trend line forming with resistance near 1.3800 on the same chart. To move into a positive zone, the pair must clear the 1.3800 resistance zone.
On the downside, the pair could find support near 1.3650. A downside break below 1.3650 may possibly lead the pair back to 1.3600.
Fundamentally, the US Manufacturing Purchasing Managers Index (PMI) for July 2021 (Prelim) was released by the Markit Economics. The market was looking for a decline from 63.4 to 62.5.
The actual result was lower than the forecast, as the US Manufacturing PMI dipped from 63.4 to 61.2 in August 2021 (Prelim). Besides, the US Services PMI also declined from 59.9 to 55.2.
Overall, the US Dollar started a downside correction, but pairs such as EUR/USD and GBP/USD are facing a lot of hurdles on the upside.
Economic Releases
- German Gross Domestic Product for Q2 2021 (YoY) – Forecast 9.2%, versus 9.2% previous.
- German Gross Domestic Product for Q2 2021 (QoQ) – Forecast 1.5%, versus 1.5% previous.
- US New Home Sales for July 2021 (MoM) – Forecast -2.7% versus -6.6% previous.
