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Sep 29, 2016

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Market Analysis

Home » Technical Analysis » Daily » GBPUSD Sharp Downside Reversal

GBPUSD Sharp Downside Reversal

Posted by FXTimes in Daily - May 4th, 2016 10:56 am GMT

pound-sterling-us-dollar

Key Points

  • British Pound came under a lot bearish pressure this week against the US dollar, and traded lower below 1.4500.
  • There was a bullish trend line formed on the hourly chart of GBPUSD, which was cleared by the bears during the downside leg.
  • In the UK today, the PMI Construction was released by the Chartered Institute of Purchasing & Supply and Markit Economics.
  • The result was disappointing, as there was a decrease from 54.2 to 52.0 in April 2016.

Technical Analysis

The British pound after trading as high as 1.4767 against the US Dollar found sellers and started to move down. The downside move was very sharp, as the GBPUSD pair broke a bullish trend line formed on the hourly chart and the 100 hourly simple moving average.

GBPUSD

The GBPUSD today traded as low as 1.4463 and currently making an attempt to correct higher. Any correction from the current levels may face sellers on the upside near 200 hourly SMA.

A break below 1.4463 may call for a test of the 1.4420 support area.

UK Construction PMI

Today in the UK, PMI Construction, which shows business conditions in the UK construction sector was released by the Chartered Institute of Purchasing & Supply and Markit Economics. The forecast was slated for a minor decline from 54.2 to 54.0 in April 2016. However, the result was disappointing, as there was a decrease to 52.0.

The report stated that “April data signalled a further loss of momentum across the UK construction sector, with new order volumes stagnating and overall business activity expanding at its slowest pace since June 2013“.

In short, there is nothing to cheer for the GBP bulls, which could result in more losses in the GBPUSD pair in the short term.

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