GBPUSD is attempting to end the significant downtrend that led to a more than 8% decline in the currency’s value. The dollar index continues to dominate the forex market, fueled by strong data coming from the US. Yesterday, weak PMI numbers from the Eurozone further bolstered the dollar index. Although the UK’s composite PMI increased from 48.5 to 48.6, it still remains below the critical 50 level. In contrast, the US composite PMI rose from 50.2 to 51, indicating an increase in economic activity in both the services and manufacturing sectors. Additionally, UK job claims rose by 20.4 in September.
Despite the data advantage, GBPUSD has experienced a significant decline in recent months, and this downward trend may be approaching its end. The price appears to be consolidating near the upper boundary of the trend channel, forming a pattern reminiscent of a triangle. GBPUSD has also reclaimed the 89-day moving regression line. However, the slope of the regression remains below its signal moving average and the zero line. The key resistance to watch for a potential trend reversal is 1.23. Daily closes above this level could indicate the possible end of the bearish trend.
Regarding downward movements, the 38.2% Fibonacci level of the 2022-2023 surge at 1.2075 has been a reliable support since the beginning of October. A breach of this support could push the British pound/US dollar pair down to the lower boundary of the trend channel, which currently sits at 1.1875.
