Technical Analysis

GBP/USD Analysis – Aug 23, 2021

By LonghornFX Technical Analysis
Aug 23, 20214 min

UK Manufacturing and Services PMI

GBP/USD finished the day at $1.3621, with a top of $1.3649 as well as a low of $1.3601. Due to increased risk-off market sentiment and the strengthening of the US dollar, the GBP/USD fell for the second straight session, dropping to near one-month lows.

Due to the instability of the British Pound and the risk-off market attitude on Friday, the riskier asset GBP/USD fell. The overall number of coronavirus cases in the UK was 6,492,906, including 131,640 deaths. Fears of the Delta variation spreading across the country weighed on the British Pound, contributing to the GBP/USD drop on Friday.

Furthermore, the UK Health Security Agency has stated that a new national surveillance program will begin next week, which will offer antibody testing to those who test positive in the UK. According to the agency's statement, this will aid in improving the authorities' understanding of virus immunity from vaccination and infection.

Additionally, experts in the United Kingdom were investigating whether smaller booster doses could be used to store vaccines for the rest of the world. Despite the shortage of vaccines, a new plan to employ "fractional dosages" has been proposed to ensure that more individuals can be immunized.

All of the British government's and health authorities' attempts to combat the coronavirus have raised fears that the virus will continue to harm the economy for some time and that immunizations will not be enough to stop the illness from spreading. These concerns continued to weigh on the British Pound, contributing to a further drop in GBP/USD.

On the data front, the GfK Consumer Confidence in August fell to-8 against the expected-7 at 04:01 GMT, putting pressure on the British Pound. The GBP/USD exchange rate dropped even further as a result of this. At 11:00 GMT, retail sales in the UK had fallen by-2.5 percent in July, vs. a forecast of 0.2 percent, putting pressure on the British Pound. The GBP/USD was driven even lower as a result of this.

In July, the Public Sector Net Borrowing fell to 9.6 billion dollars, vs. a projection of 10.5 billion dollars, bolstering the British Pound, which led to a further drop in GBP/USD on Friday.

On the other hand, the US Dollar Index hit a nine-and-a-half-month high of 93.73 on Friday, adding to the GBP/losses. USD's Because of its safe-haven character, the dollar was gaining support in the market amid growing fears about the global economic recovery. The GBP/USD currency pair's downward trend was aided by rising US rates on the benchmark 10-year note, which reached 1.267 percent.

The loss of GBP/USD on Friday was exacerbated by the risk-off market mood prompted by increased concerns about the coronavirus transmission due to the Delta strain, as it is a riskier currency pair that tends to decrease in risk-off market sentiment.

GBP/USD Intraday Technical Levels

Support Resistance

1.3726 1.3785

1.3696 1.3816

1.3666 1.3845

Pivot Point: 1.3756

GBP/USD - Technical Outlook

The GBP/USD is trading with a bearish bias at the 1.3640 level. In the 4-hour timeframe, the GBP/USD pair’s immediate support prevails at the 1.3621 level, which marks the pivot point support. A bearish breakout of this support level exposes the cable towards the following support areas of 1.3602 and 1.3563 levels.

On the flip side, the bullish bias dominates above an intraday pivot point level of 1.3621. A bullish crossover at the 1.3660 level exposes the GBP/USD pair until the 1.3680 level. The Stochastic indicator is holding in a bearish zone, supporting the odds of a selling trend. However, the failure to break below the 1.3620 level can potentially trigger a bullish reversal in the GBP/USD pair today. The primary focus will be on the UK manufacturing and services PMI that will come out during the UK session. It may help drive further price action in the GBP/USD prices. All the best!


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