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GBP/USD Forecast: Would Likely Accelerate Its Decline Once Below The 1.3100 Figure

Valeria Bednarik - Chief Analyst at FXStreet

GBP/USD Current Price: 1.3133

  • The December UK Markit Manufacturing PMI came in at 47.5, missing the market’s expectations.
  • Markit will release this Friday the December Construction PMI, expected at 45.9.
  • GBP/USD would likely accelerate its decline once below the 1.3100 figure.

The GBP/USD pair has trimmed most of its Tuesday’s gains, settling at around 1.3130 after peaking at 1.3284 earlier this week. The dollar’s advance had no certain catalyst, but the Pound was hurt by local data, as the December UK Markit Manufacturing PMI came in at 47.5, slightly better than the previous estimate of 47.4, although below the expected 47.6. According to the official report, manufacturing output contracted at its fastest pace in almost seven-and-a-half years, as a result of “ declining intakes of new work from both domestic and overseas clients, while efforts to reduce Brexit safety stocks also stymied output volumes.”

The UK will release several macroeconomic figures this Friday, although the only relevant one is the December Markit Construction PMI, foreseen at 45.9 vs. the previous estimate of 45.3.

GBP/USD Short-Term Technical Outlook

The GBP/USD pair has retreated from around the 61.8% retracement of its latest daily decline, now trading a handful of pips below the 38.2% retracement of the same slide, which favors a downward extension in the upcoming sessions. In the 4-hour chart, the pair is a few pips below its 20 SMA while battling with a directionless 100 SMA, as technical indicators challenge their midlines with sharp bearish slopes. The pair has several intraday lows around the 1.3100 figure, while the next Fibonacci support comes at 1.3050, a possible bearish target should the upcoming slide continues.

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