GBP Has Faint Hope For Revival
InstaForex Group | Jul 23, 2021 06:56AM ET
Over the last couple of days, GBP/USD has picked up steam amid the lack of economic data from the UK. Today the economic calendar is loaded with macroeconomic statistics, though it will hardly bring any good news. The UK has reported on its retail sales for June that discouraged investors.
The annual pace of growth slowed down to 9.7% from 24.6%. The annual change is of little importance now because the data is still disfigured by the low base effect. Traders are more interested in a monthly change. Retail sales rose 0.5% on month, falling short of expectations for a 0.7% increase. The crux is that the British economy is getting back on track much slower than expected.h2 UK Retail Sales
Besides, preliminary PMIs also dampen investors’ optimism. The manufacturing PMI is expected to drop to 62.5 from 63.9. Analysts project just a downtick in the service sector to 62.3 from 62.4. Nevertheless, flash PMIs indicate that business activity in the UK economy is ebbing away. This is certainly bearish for the sterling.
h2 UK Manufacturing PMI (Flash)The only thing that could save the pound sterling today is preliminary PMIs for the US. In particular, the ISM manufacturing PMI could decline to 61.8 from 62.1. The services PMI is expected to decrease to 64.1 from 64.6. As the US statistics is always high priority for investors, downbeat PMIs in the US will certainly outweigh tepid data from the UK. So, the pound sterling will be able to keep afloat.
h2 US Services PMI (Final)In the course of a technical correction from the interim support of 1.3570, GBP/USD rebounded to the area of 1.3750/1.3800 where the bears took control over the bulls. Hence, traders had to cut their long positions.
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The currency pair is still the instrument of big speculative interest. So, the average daily candlestick is measured at 120 pips since Monday. The market dynamic is slowing down.
Under the current market conditions, we suppose that the area of 1.3750/1.3800 is still putting pressure on the buyers that could bring the correction to a halt. In case the price meets resistance in line with expectations, GBP/USD will be able to reverse its direction in the near time. The market will provide a stronger signal once the price holds firmly below 1.3725.
In terms of complex indicator analysis, we see that technical tools are generating mixed signals in 1-minute and 1-hour charts. At the same time, a daily chart still suggests selling opportunities.
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