Forex: GBP/USD Downgoing Trend. Is There A Chance?

The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

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Preliminary data on business activity indices in the UK, in principle, remained unnoticed, although in fact they turned out to be worse than forecasts that were not even comforting. Only the index of business activity in the service sector turned out well, which decreased from 52.6 points to 52.5 points, with a forecast of 51.8 points. The manufacturing index, instead of decreasing from 52.1 points to 51.3 points, literally collapsed to 46.0 points. As a result, the composite index of business activity decreased from 52.1 points to 50.9 points, although it was expected to decline only to 51.3 points.

Composite PMI (UK):

The market revived only on the release of similar data on the United States, which also turned out to be noticeably worse than forecasts. Only the manufacturing index turned out to be better than them, which fell from 52.2 points to 51.3 points, while it was expected to fall to 51.1 points. But the index of business activity in the service sector fell from 47.3 points to 44.1 points. But they were waiting for its growth to 48.0 points. Because there is nothing surprising in the fact that the composite business activity index, instead of rising from 47.7 points to 49.0 points, fell to 45.0 points.

Composite PMI (United States):

Such weak data made it possible for the pound to rise above the 1.1800 mark, where it continues to be in. Given that the macroeconomic calendar is almost empty today, most likely the market will stagnate in anticipation of tomorrow, when the conference starts in Jackson Hall. Where Federal Reserve Chairman Jerome Powell will give his speech, from whom they are waiting for signals about the adjustment of the policy of the US central bank. Moreover, in the direction of lowering the growth rates of interest rates.

The GBPUSD currency pair, after a short stagnation within the support level of 1.1750, increased the volume of long positions. This resulted in forming a technical pullback in the market by about 120 points. Given the overheating of short positions in the pound for one and a half weeks, the current pullback is the least that could happen on the market.

The technical instrument RSI H4 left the oversold zone at the time when the rollback is formed.

The signal to buy was the critical oversold level of 17.65.

The MA moving lines on the Alligator H4 indicator are still pointing down as the retracement is relatively small compared to the down cycle.

Expectations and prospects

Despite the scale of the pullback, the pound is still oversold. For this reason, keeping the price above 1.1880 may push bulls to form a full-size correction in the market.

Also, in order to prolong the downward trend, the quote needs to stay below the level of 1.1750 in a four-hour period.

Comprehensive indicator analysis in the short-term and intraday periods indicates a long position due to a rollback. In the medium term, the indicators are oriented to sell, due to updating the local low of the downward trend.

Source: Forex Analysis & Reviews: Hot forecast for GBP/USD on 24/08/2022

The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

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