The GBP/USD pair has fallen to three weeks’ lows. Taking into account how fast the American currency has been strengthening this Autumn, one can really expect the trend to continue in the future.
Over a short-period of time, the strong USD has easily sent the British Pound to the levels it reached in the middle of September. Investors increased their focus on the technical picture and paid little attention to the fundamental news, although it may offer something really impressive.
Yesterday, it became known that September was a pretty “flat” month for the British manufacturing. The HIS Markit statistics showed that the Manufacturing PMI decreased more than earlier. The indicator fell from 56.7 points in August to 55.9 points in September. It’s still above the psychologically-crucial level, 50 points, which shows the difference between growth and decline, but may yet plummet pretty quickly.
The same report confirmed that the output was growing, but also a bit slower than before. The ascending tendency has been continuing for 14 months in a row, but in September the number of new orders was increasing moderately, and that’s some kind of a warning sign. However, summarizing the above, one can say that British enterprises and factories are quite optimistic as 51% of them are expecting the British manufacturing to improve in the next 12 months.
The Brexit went on the back burner for a while. The negotiations between the United Kingdom and the European Union are in progress and at present moment the parties are discussing aspects of future legislative and taxation systems, and trade and economic cooperation after the UK exits the Union. There is no point in waiting for any quick news here. The process is going on according to “two steps forwards, one step backwards” principle.
The technical chart of the GBP/USD pair shows that the uptrend continues and the fact that bulls pushed the price above the resistance line only made them stronger. The short-term picture of the previous two weeks indicates the correction inside the current ascending channel. The main target of the descending correction is close to the support level at 1.2975. However, if one takes into account the fact that the uptrend may get stronger, the target of the correction may be close to the fractal level at 1.3148, where the price may reverse. In case the instrument reverses and starts forming a new rising impulse, the target will be at 1.40.