GBP/USD Price Analysis: Cable bears need validation from 1.2530 and US ISM Services PMI
- GBP/USD licks its wounds after refreshing three-month low.
- 10-week-old descending support line, sluggish MACD signals and the below-50 RSI favor corrective bounce.
- Convergence of 100-EMA, 38.2% Fibonacci ratio guards immediate recovery of Cable pair.
- Pound Sterling traders seek directions from US ISM Services PMI amid light calendar at home.
GBP/USD portrays a corrective bounce off the short-term key support line while picking up bids to 1.2570 during the early hours of Wednesday’s trading.
The Cable pair dropped to the lowest level since June 13 amid broad US Dollar strength before a 2.5-month-long falling trend line joined downbeat oscillators to trigger the quote’s bounce. However, the cautious mood ahead of the US ISM Services PMI for August, expected 52.6 versus 52.7 prior, as well as the final readings of the US S&P Global PMIs for the said month, prod the Pound Sterling traders of late.
Also read: ISM Services PMI Preview: Strength may spook markets, boosting US Dollar
Given the GBP/USD pair’s rebound from the aforementioned key support line, backed by sluggish MACD signals and the below-50.0 RSI (14) conditions, the quote is likely to edge higher.
However, a convergence of the 100-day Exponential Moving Average (EMA) and the 38.2% Fibonacci retracement of its March–July upside, near 1.2630, will be a crucial upside hurdle to convince the Cable buyers to return to the table.
Following that, a downward-sloping resistance line from late July, around the 1.2700 round figure, will act as the final defense of the GBP/USD bears.
On the contrary, a downward-sloping support line from late June, around 1.2530 by the press time, puts a floor under the GBP/USD price ahead of the 200-EMA support of 1.2490.
In a case where the Pound Sterling remains bearish past 1.2490, the odds of witnessing a slump to the 61.8% Fibonacci retracement level, also known as the Golden Ratio, surrounding 1.2315 can’t be ruled out.
GBP/USD: Daily chart
Trend: Corrective bounce expected