The Great Britain Pound (GBP) inched higher against the US Dollar (USD) on Monday, increasing the price of GBPUSD to more than 1.2950 as bulls seem to gain strength. The technical bias has already turned bullish in short term because of a Higher Low and Higher High in the recent wave. After leaving a couple of bullish pin bars on a monthly chart, cable looks all set to rebound in the long term as well.
As of this writing, the pair is being traded near 1.2977. A hurdle can be seen around 1.3000, the psychological number and then 1.3296, the swing high of the latest major upside rally. A break above the 1.3296 resistance will confirm the ongoing bullish bias, validating a move towards the 1.3500 resistance area in the long run.
On the downside, the pair is expected to find a support around 1.2915, the intraday low of Friday ahead of 1.2865, the swing low of the recent downside move and then 1.2796, the post Brexit low. The technical bias will remain bullish as long as the 1.2865 support area is intact.
US Manufacturing PMI
Activity in the US manufacturing sector registered a larger-than-expected decline in September, amid the slowest expansion of new orders this year, according to the preliminary data released on Friday. In a report, market research group Markit said that its flash manufacturing purchasing managers’ index (PMI) dropped to 51.4 in September from the prior month’s final reading of 52.0. Analysts had expected the index to decrease to 51.9 this month. On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term.