After the opening of the European session on Friday, the GBP/USD began to lose. The British currency declined amid the release of the UK Manufacturing PMI index. The reading turned out to be significantly worse than the preliminary estimate. Economists had expected the figure to drop to 53.4 from 54.6. However, it decreased to 52.8.
Curiously enough, the pound sterling did not slide down considerably, which was strange given the influence of the report mentioned above on the market. Besides, GBP managed to rebound a bit later. After the opening of the American session, traders realized that some other factors impacted its movements apart from macro stats.
The US also unveiled its manufacturing PMI. Unlike the UK, the figure surpassed the preliminary forecast. The index was projected to contract to 52.4 from 57.0. Yet, it dipped only to 52.7. However, during the US session, the pound sterling rose. Its increase was a rebound that happened after a noticeable decline. Its upward rebound occurred thanks to technical factors. Notably, it does not contradict the main trend. The US dollar remains stronger amid the widening key rate gap.
Technical Outlook - GBP/USD
Today, trading floors in the US are closed on Independence Day. So, currencies are likely to consolidate at their Friday levels today. American traders provide high market liquidity. Therefore, market activity is going to be sluggish without them.
GBP/USD rebounded from the psychologically important level of 1.2000. It led to a sharp drop in the volume of short positions and an increase in long ones. On the H4 chart, the RSI indicator was in the oversold zone, which was quite expectable given the impulse move of the pair. As a result, this move signaled a price rebound.
On the H4 and D1 charts, the Alligator indicator shows that the moving averages are pointed downwards, which is in line with the primary trend.
Thus, a technical rebound could indicate a trend change, which may only strengthen the downward movement later. A sell signal will appear only if the price drops below 1.1950, at least on the 4H chart. In this case, the medium-term downtrend will be prolonged, and traders should brace for new lows. Until then, the pair may remain somewhat volatile.
Due to a technical pullback, the complex indicator analysis gives a buy signal on the short-term charts. Technical indicators signal the extension of the downtrend on the intraday and medium-term charts.