The pound sterling lost ground following the release of PMI indexes. Investors were disappointed that the figures turned out to be slightly worse than preliminary estimates. For instance, the Services PMI index was projected to decline to 58.6 from 59.1.
However, it slid to 58.5. The Composite PMI index contracted to 57.6 from 57.8 versus the forecast reading of 57.7. The PMI indexes have dropped more than expected, naturally bearish for the pound sterling. However, it did not decrease as the discrepancy between the actual and forecast readings was small.
Notably, the pound sterling nosedived immediately after the publication of the Nonfarm Payrolls report. Its downward movement could be even steeper if not for one fact. The US dollar rose amid a decline in the employment rate to 4.2% from 4.6%.
Economists had expected a drop to 4.5%. It came as a pleasant surprise for market participants. The greenback could have strengthened even more, but the economy added only 210,000 new jobs versus the forecast reading of 550,000. It indicates a slow pace of a decline in unemployment. The labor market has stabilized, and a further decrease in the unemployment rate is unlikely.
Today, the macroeconomic calendar is uneventful. So, trading is likely to unfold quietly. Speculators will adjust their trading strategies according to the current market situation. Besides, analysts note that such a substantial drop in unemployment may signal the upcoming interest rate hike by the Fed.
The GBP/USD pair completed the construction of the 1.3290/1.3350 sideways range by resuming a downward momentum. The pound sterling fell to 1.3194, a low of Nov. 30.
On the 4H chart, the RSI indicator is approaching the 30 line, which signals short positions. On the D1 chart, the indicator gives a similar signal, which may lead to an increase in the volume of short positions.
On the daily chart, the price will reach a new yearly low, which is a signal of the downward cycle. It may lead to a recovery and the resumption of the uptrend.
Outlook
If the price fixes below 1.3190 on the 4H chart, an increase in short positions should be expected. As a result, the quotes may tumble to the physiological level of 1.3000. Alternatively, the price may rebound from the low of 1.3194, triggering a temporary corrective movement.
The complex indicator analysis gives a short signal on short-term and intraday charts due to the convergence of the price with the low of Nov. 30. Technical indicators signal an opportunity to sell in the medium term as the downward movement is likely to continue.
