FX.co ★ GBP/USD: imminent breakdown post-US data

The GBP/USD pair ended its rebound and now is trading at 1.2700 at the time of writing. The downside pressure remains high as the Dollar Index tries to resume its growth after ending the temporary drop.

Fundamentally, the UK Flash Manufacturing PMI came in at 46.2 points versus 46.9 points estimated, while Flash Services PMI dropped from 55.2 to 53.7 points below 54.8 points forecasted. The economic data was bad for the British Pound. On the other hand, the US Flash Manufacturing PMI came in at 46.3 points versus 48.6 points expected, confirming further contraction, while Flash Services PMI was reported at 54.1 above 53.9 estimates, but below 54.9 in the previous reporting period.

GBP/USD Seems Undecided!

As you can see on the H1 chart, the rate stays near the 1.2691 former low which represents a downside obstacle. Staying near this support may announce an imminent breakdown and continuation.

Technically, the false breakout with great separation above the upper median line (UML) of the descending pitchfork signaled a potential larger correction.

GBP/USD Outlook!

A valid breakdown below 1.2691 activates more declines and brings us new short opportunities. This is seen as a bearish signal with a first target at the S1 (1.2590).