GBP/USD: Will the UK construction PMI rescue the bulls?

The minor-recovery seen in GBP/USD from three-week lows of 1.3231 appears to have run into 1.3250 resistance, with markets now awaiting the UK construction PMI data for fresh trading impetus.

GBP/USD: 1.3200 on sight?

After a brief phase of bearish consolidation in the overnight trades, the spot met fresh supply and broke to the downside at Tokyo-open, after the demand for the US dollar resurged across its main peers, as the Asian traders reacted positively to upbeat US factory data, which backed the case for a Dec rate hike and three more rate increases next year. The USD index now jumped to fresh 7-week tops at 93.75, now flirting with the multi-week highs, up +0.25% on the day.

Additionally, looming uncertainty over the Brexit negotiations combined with political disarray with regard to the UK PM May’s leadership collaborate to the weakness seen in the pound against its American counterpart. Meanwhile, markets remain not so convinced over a BOE rate hike, despite the recent hawkish remarks from the BOE Governor Carney.

More so, the recent downward revision to the UK Q2 GDP combined with downbeat UK manufacturing PMI report also keeps the GBP bulls at bay.  Focus now shifts towards the UK construction PMI data and BOE FPC meeting minutes due later in Europe ahead of FOMC member Powell’s speech for further momentum.

GBP/USD levels to consider             

According to Eren Sengezer, Analyst at FXStreet, “The pair could encounter the first technical support at 1.3200 (psychological level) ahead of 1.3235 (50-DMA) and 1.3030 (100-DMA). On the upside, resistances align at 1.3415 (20-DMA), 1.3500 (psychological level) and 1.3585 (Sep. 21 high). With today's sharp fall, the RSI indicator on the daily graph turned south below the 50 handle, suggesting that the bearish momentum is building up.”