GBP/USD eyes on 200-D SMA to marry YTD lows
- GBP/USD bears to slow down from here, RSI says so.
- GBP/USD: bears in full control, targets are now the 200-D SMA.
GBP/USD has continued its decline with the bearish engulfing weekly stick the big give away with the rally capped by the descending 21-W SMA at 1.3859. Further poor data has weighed on cable today and US data continues to stack up better than in the UK. Currently, GBP/USD is trading at 1.3608, down -1.11% on the day, having posted a daily high at 1.3775 and low at 1.3588.
GBP/USD has fallen further into the bear's lair, below 1.3710/20 a, a new development having dropped below the ascending trendline support towards the end of last month. UK Markit PMI manufacturing arrived at 53.9% vs 54.8% expected and at a 17-month low.
DXY through 200-D SMA
At the same time, the DXY pierced the 200-D SMA for the first time since 15 May last year and through onto the 92 handle with a day's range of 91.7990-92.5660 as the reflation trade continues to unwind, (stocks/commodities, EMs lower). US 10's have traded between 2.95-2.98% so far, with a bullish bias back towards 3%. ( DXY traders can now target 38.2 retracement level at 94.30.)
The US ISM manufacturing index fell a little more than expected in April, coming in at 57.3 versus the 58.5 consensus and down from the 59.3 reading from March, ( the weakest reading since July 2017), which was pretty much figured as just a blip in a bullish trend, and as analysts at ING point out, "we are still at levels that historically were consistent with GDP growth of 5%."
For the week ahead, we will have more from the UK ahead of the BoE MPC meeting on 10th May:
- Wednesday - Construction PMI (expected 50.5, prior 47.0)
- Thursday - Services PMI (expected 53.5, prior 51.7)
- Thursday - Composite PMI (expected 53.7, prior 52.5)
GBP/USD levels
Eyes are firmly on the yearly low at 1.3457 now that 1.3720 is cleared and the double top in early Jan at 1.3600/12 has also been pierced. The next objective is a break of the 200-D SMA at 1.3532. RSI is onto oversold territory so progress from here may not be as sharp.