The GBP/USD pair failed to stop its previous session losing-streak, taking further offer well below the 1.3300 level while representing 0.96% losses on the day. That situation was mainly due to the prevalent bid tone surrounding the U.S. dollar, sponsored by the upbeat U.S. data, which earlier fueled the hopes of the U.S. economy.
On the other hand, the reason behind the currency pair declines could also be associated with the coronavirus woes and downward revision of the U.K. Services PMI. The rising Brexit uncertainty and Bank of Governor Andrew Bailey's negative comments also joined the on-going pessimism around the cable and contributed to the currency pair losses. At this particular time, the GBP/USD currency pair is currently trading at 1.3248 and consolidating in the range between 1.3248 - 1.3357.
As we already mentioned that the U.K. services sector activity grew less-than-expected in August, as per the final report from IHS Markit released on the day.
Across the lake, the market trading sentiment was being supported by optimism over a possible vaccine and treatment for the highly infectious coronavirus. These hopes fueled after the reports that the global policymakers, around 76 rich countries, came in the ground to help for the vaccine developments and distribution. This gave further support to the prevalent upbeat market mood. On the flip side, the upbeat figures of China's Caixin Services PMI also added further optimism in a positive mood.
At the data front, China's Caixin Services PMI rose to 54.00 versus 50.4 expected and 54.1 before August. The same push the composite PMI data to 55.1 versus 54.5 prior.
At the USD front, the broad-based U.S. dollar managed to took bids on the day as Tuesday's upbeat U.S. data remained supportive of the equity market's bid tone. However, the U.S. dollar gains seem rather unaffected by Wednesday's downbeat ADP data and held its gaining streak, at least for now. Thus, the U.S. dollar's modest gains could be considered the major factor that kept the currency pair lower. Whereas, the U.S. Dollar Index that measures the greenback against a bucket of 6-major currencies rose by 0.03% to 92.977.
At the Brexit front, the E.U.'s Chief Brexit Negotiator Michael Barnier showed a willingness on Wednesday to reduce fisheries demand after saying that the U.K. hasn't engaged in the key Brexit conditions. As well as, the lobby group from Ireland wants Brexit preparations marked in November month's budget. However, the currency pair seems rather unaffected by the above statements.
At the US-UK front, the next phase of the UK-US trade talks will start on Sept 08, as per the British Junior Trade Minister Greg Hands stated. However, this somewhat positive statement failed to help the currency pair.
Looking ahead, the market traders will keep their eyes on the release of the US ISM Non-Manufacturing PMI for some fresh direction. In the meantime, the updates surrounding the fresh Sino-US tussle and USD price dynamics will be key to watch.
Daily Support and Resistance
S1 1.314
S2 1.324
S3 1.3297
Pivot Point 1.3341
R1 1.3398
R2 1.3441
R3 1.3542
The GBP/USD prices continue trading bearish, crossing below the 1.3365 support level, which is now working as a Cable resistance level. On the lower side, the GBP/USD pair may continue trading bearish around 1.3265, which is working as immediate support. Bearish crossover of 1.3265 level can trigger selling until 1.3100.Good luck