The Great Britain Pound (GBP) slid down against the US Dollar (USD) on Friday, decreasing the price of GBPUSD to less than 1.2900 following some key economic events. The technical bias has however turned bullish because of a higher high in the recent upside rally.
As of this writing, the pair is being traded near 1.2873. A support can be noted around 1.2844 (a horizontal support area) ahead of 1.2795 (the 23.6% fib level) and then 1.2700 (the confluence of horizontal support as well as psychological number) as demonstrated in the given below chart.
On the upside, a hurdle may be noted around 1.2997 (a short-term horizontal resistance area) ahead of 1.3047 (the high of the recent upside wave) and then 1.3100 (the psychological number). The technical bias shall remain bullish as long as the 1.2700 support area is intact.
US Manufecturing PMI
The Institute for Supply Management’s (ISM) Manufacturing PMI said that growth in activity was essentially unchanged in May. The composite index was edged marginally higher, up from 54.8 in April to 54.9 in May. On the reassuring front, it was the ninth consecutive monthly expansion in manufacturing activity in the United States, with the sector showing signs of definite progress after two years of notable challenges. The sample comments tend to echo those improvements, citing better economic conditions, a favorable outlook and increased difficulties in finding labor. At the same time, the headline index has drifted lower since February (57.7), and respondents continue to cite some lingering headwinds and increased pricing pressures. The ISM report mostly mirrors other sentiment surveys which have observed some pullbacks from multiyear highs post-election, even as they remain mostly encouraging.
Considering the overall technical and fundamental outlook, selling the pair around current levels may be a good strategy in short to medium term.