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22/08/24
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GBP/USD Hits 1.3100 Milestone Amid Strong UK PMI Data
The GBP/USD currency pair has reached a significant milestone, trading above the 1.3100 mark on Thursday, the highest level reached since July 2023. This upward trend marks the fifth consecutive trading day of gains for the pair, with the latest peak at approximately 1.3130. While the technical indicators suggest that the pair may be in overbought territory, positive Purchasing Managers’ Index (PMI) data from the UK appears to bolster the Pound Sterling’s strength.
The S&P Global/CIPS Composite PMI for August has shown a notable improvement, rising to 53.4 from July’s reading of 51.9. This reflects a robust expansion in business activity within the private sector, signaling that the UK economy is on an upward trajectory. The PMI data indicates a combination of enhanced economic growth, increased job creation, and a decline in inflationary pressures, which paints a promising picture for the UK’s economic landscape.
Later in the day, market participants will be keeping a close eye on the preliminary PMI data for the US, which is anticipated to dip to 53.5 from 54.3 in the previous month. A weaker PMI reading, particularly if it approaches or falls below the neutral 50 mark, could reignite concerns regarding a potential slowdown in the US economy. This scenario may lead to further depreciation of the US Dollar against its counterparts. Conversely, a surprisingly strong PMI could bolster the USD, creating headwinds for the GBP/USD pair in its ascent.
From a technical perspective, GBP/USD is positioned near the upper boundary of its ascending regression channel, with the Relative Strength Index (RSI) on the 4-hour chart indicating overbought conditions above 80. On the upside, a substantial resistance zone appears to be established around 1.3130-1.3140, which corresponds with the highs seen in July 2023. Key support levels include 1.3100, acting as an interim support level, followed by 1.3075 and 1.3030, which mark the mid-point and lower limit of the ascending channel, respectively.
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