After a rather sharp decline that lasted for almost a whole day, the pound sterling may rebound today amid the release of preliminary estimates of PMI indices in both the UK and the US.
In the UK, the Manufacturing PMI, Services PMI and the Composite PMI all disappointed and declined more than the forecasts.
However, the pound sterling may need additional drivers for growth, namely the same data from the US. But, the PMI figures from the US may also fall. The Manufacturing PMI Index is likely to decrease to 57.0 from 57.7.
The Services PMI may also nosedive to 56.0 from 57.6. As a result, the Composite PMI Index is projected to tumble to 56.7 from 57.0.
The pound/dollar pair dropped sharply after a short-term flat near the 1.3600 level. The pound/dollar pair dropped sharply. A sell signal was formed when the price held below 1.3572, the low of Jan. 18. It triggered an increase in the volume of short positions.
The RSI indicator moves in the lower area on the 4H chart, signaling a strong downward movement. At the same time, the RSI D1 indicator is approaching 50. A signal to sell the pound sterling will appear only after passing the middle line from top to bottom.
There is a gradual change in trend on the daily chart. On this timeframe, there has been no breakout of the high since Jan. 13. This is why traders see signs of recovery that may lead to an upward movement.
Outlook
Bears are likely to take the upper hand if the price fixes below 1.3530. If so, the pound sterling slips to the range of 1.3500-1.3400. Speculators may consider an alternative scenario if the price holds decline, consolidating within the range of 1.3540/1.3580.
Due to a gradual downward movement, the complex indicator analysis signals sales on short-term and intraday charts. Technical indicators have changed the upward signal to mixed in the medium term due to a possible trend reversal.