The dismal data release of the United States (US) manufacturing and service sector in the New York session yesterday has made the US dollar currency fail to maintain the strengthening exhibited since last week's trade and continued into the beginning of this week.
The US services PMI data which fell to 44.1 points for August shows the most significant contraction since May 2020. Meanwhile, the manufacturing sector is seen to have shrunk to 51.3 points reflecting the growth in the manufacturing sector which is also the lowest since July 2020.
While influencing the Pound in the previous European session, preliminary readings for UK manufacturing and services (PMI) data were also seen to have eased compared to last month with the UK manufacturing sector falling to 46.0 points for August marking the first contraction in factory activity since May 2020.
Economists forecast UK inflation to jump to 18.6% by the start of 2023 due to soaring wholesale gas prices, after July's inflation reading hit a recent 40-year high of 10.1%.
Assessing the price movement on the chart of the GBP/USD pair, which initially moved slightly horizontally above the barrier level of 1.17600 at the beginning of the Asian session yesterday then showed a decline in the European session to the level of 1.17200, marking the latest 2-year low since March 2020.
However, the price has significantly rebounded in the following trading session after the market reaction to the published US economic data saw a daily increase of around 160 pips was recorded in the price.
The surge was seen touching the 1.18800 level which became a resistance for the price before the price shrank again to close the New York trading session around 1.18300.
Continuing in the Asian session today (Wednesday), the price is moving slowly and slightly shrinking playing above the latest support level at 1.18000 with the Moving Average 50 (MA50) support level on the 1-hour time frame on the GBP/USD chart being the focus of investors to be tested by the price .
If the price manages to maintain the strengthening and resume the rebound from 1.18000 and the MA50 support level, the price increase that occurs will stalk the 1.18800 barrier level that was tested on yesterday's surge and is likely to cross it to signal the start of a bullish trend movement.
The price that managed to break the barrier level is expected to rise to the next concentration levels towards around 1.19400 before going to the concentration zone of 1.20000.
On the other hand, if the price does not succeed in continuing the strengthening and the price moves below the MA50 and 1.18000 support levels, the price will be expected to shrink to a lower level, resuming the downward trend exhibited earlier.
The next drop in price is expected to overcome the lowest level reached yesterday around 1.17200 before the price recorded the latest 2-year low with a target to reach 1.16000.
