#GBPUSD @ 1.17674 -imp levels: whipsaws after UK services PMI improves but manufacturing PMI contracts.

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• GBP/USD whipsaws after UK services PMI improves but manufacturing PMI contracts.
• The US dollar maintains the pullback amid cautious optimism, weaker Treasury yields.
• Bear cross remains in play, as GBP bears eye a daily close below critical 1.1760 support line.

The pair currently trades last at 1.17674.

The previous day high was 1.1838 while the previous day low was 1.1742. The daily 38.2% Fib levels comes at 1.1779, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1802, expected to provide resistance.

GBP/USD is struggling once again to extend the recovery while holding below the 1.1800 level, as bears remain unconvinced by the mixed UK Preliminary Business PMI surveys.

While activity in the services sector remained near July’s 52.6, the manufacturing component tumbled to 46.0 in August from 52.1 in July, its lowest since May 2020.

Although a minor improvement in risk sentiment after an upside surprise delivered by the German Preliminary PMI eases fears over an imminent recession and lifts the European stocks. This helps the higher-yielding GBP to hold its ground against the US dollar.

The greenback pulls back from close to 19-year highs amid a sell-off in the US Treasury yields across the curve. Investors also book profit on their USD longs after the recent relentless rise and ahead of a fresh batch of relevant US economic data. The US S&P Global Preliminary manufacturing and services PMIs will be reported in the NA session, followed by the New Home Sales release.

Despite the renewed upside, cable remains vulnerable, as the state of the UK economy remains dire amid surging inflation, the European gas crisis and political concerns.

As observed on cable’s daily chart, the price is clinging to the critical support line at 1.1760. A daily closing below the latter is required to cement the ongoing downtrend towards the falling trendline support at 1.1565.

Ahead of that, 1.1600 – the round figure will challenge the bullish commitments. The 14-day Relative Strength Index (RSI) has stalled its descent but sits just above the oversold territory, suggesting that the downside remains more compelling.

Further, the 21-Daily Moving Average (DMA) has cut the 50 DMA from above, representing a bear cross and adding credence to the bearish potential.

If buyers manage to take out the 1.1900 round figure, then a retest of Monday’s high at 1.1838 cannot be ruled.

Fresh buying opportunities will emerge above the latter, exposing the psychological barrier at 1.1850.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.1775 at the time of writing. Pair opened at 1.1766 and is trading with a change of 0.1 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.2088, 50 SMA 1.2081, 100 SMA @ 1.2355 and 200 SMA @ 1.2868.

The previous day high was 1.1838 while the previous day low was 1.1742. The daily 38.2% Fib levels comes at 1.1779, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1802, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.1726, 1.1686, 1.1629
• Pivot resistance is noted at 1.1822, 1.1878, 1.1918

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