GBPUSD bulls continue to be under pressure near the 1.2517 support level, suggesting a possible bearish breakout. The US Dollar Index (DXY) has surpassed 105.00, and overnight yields on US Treasury bonds rose significantly in response to positive US ISM data. This development presents the GBPUSD pair with a challenge.
US PMI Suggests A Stronger USDX
The ISM Manufacturing PMI for the United States increased to 50.3 in March, from 47.8 in February, exceeding expectations by 48.4. This represented the initial expansion in manufacturing activity since October 2022, reaching its highest point since September 2022. The greater data prompted a general increase in the purchase of the United States Dollar (USD).
After the news release, the US Dollar Index (USDX) found a solid buying pressure above the February 2024 high.
Dovish BoE Grabbed Sellers'Attention
The recent dovish stance adopted by the Bank of England (BoE) in its monetary policy statement has been a factor in the strengthening of selling pressure on the Pound Sterling (GBP).
The comments of BoE Governor Andrew Bailey, which implied that market expectations for rate cuts this year are rational, fueled speculation of June rate cuts and weakened the GBP against the USD even further.
GBPUSD Data To Look At
The markets anticipate the UK Nationwide Housing Prices and S&P Global/CIPS Manufacturing PMI for March today. As per the current expectation, the HPI could come at 0.4%, down from 0.7% in the previous month.
In addition, several Federal Reserve (Fed) officials are scheduled to deliver speeches, likely influencing market sentiment. Governor Michelle Bowman, Loretta Mester, John Williams, and Mary Daly are among them.
Investors might expect a corrective trend until the Non-farm payroll release, which is scheduled for Friday. As per analysts' projection, the Non-Farm Employment Change could come at 205K, down from 275K in the previous month. Moreover, the average hourly earnings m/m could reach a level of 0.3%, up from 0.1% in the previous month.
GBPUSD Forecast Technical Analysis
In the daily chart of GBPUSD price, the recent price shows extensive downside pressure, pushing the momentum below the dynamic 100-day Simple Moving Average level. However, the major support level from the low of February 2024 is still untouched, which could be a crucial price.
In technical indicators, the 14-day Relative Strength Index (RSI) shows a bearish pressure, whereas the current reading suggests a downward slope below the 50.00 line. The MACD Histogram shows the same story, remaining below the neutral line with a bearish slope.
Based on the daily outlook of GBP USD, the upcoming nonfarm payroll would be a critical event to look at. An upbeat US data with a downside pressure below the 1.2517 support level could extend the bearish pressure towards the 1.2186 support level.
On the other hand, an immediate recovery after coming below the 1.2500 psychological level could hint at a sell-side liquidity sweep. In that case, a solid rebound with consolidation above the dynamic 20-day EMA could be a potential trend trading opportunity, targeting the 1.2995 resistance level.
