GBP/USD drops to test 1.2500 on poor UK PMI

The selling pressure behind the GBP intensified following the release of dismal UK manufacturing PMI report for March, knocking-off GBP/USD to fresh lows just ahead of 1.25 handle.

Cable finally broke its bullish consolidation phase to the downside in Europe, now extending the corrective move lower, despite a pause in the recent broad based USD rally, as the sentiment got dented by a negative surprise seen in the UK manufacturing sector activity report.

Moreover, looming uncertainties over the Brexit negotiations as a two-year long process of the UK’s exit from the EU began last week, also continues to keep any upside attempt short-lived in the major.

Focus now remains on the US ISM and Markit manufacturing PMI reports and Fedspeak due later in the NA session for fresh take on the spot.

GBP/USD Levels to consider            

Karen Jones, Analyst at Commerzbank noted, “GBP/USD near term outlook is negative: Sterling last week failed to close above its near term resistance at (1.2579/81 February 9th high, and the 78.6% retracement), and our negative bias remains. It has yet to close below the 55 and 100 day moving averages but we look for this to happen this week. Intraday Elliott counts are positive, but overhead the market faces the channel at 1.2640 and the 200 day ma at 1.2660. Below 1.2347 (Feb low) would cast attention back to the 1.2110 recent low. This is considered to be the last defence for the 1.1988 January low.”