The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Thursday, declining the price of GBP/USD to less than 1.6580 in the longest losing streak of the ongoing year. The sentiment has already turned to bearish due to a Lower Low on the daily chart.
As of this writing, the pair is being traded near 1.6577. A support can be seen near 1.6433, the swing low of the recent downside move ahead of 1.6256, the low of the last major dip as demonstrated in the following chart.
On the upside, the pair is expected to face a hurdle near 1.6535, the 76.4% fib level ahead of 1.6677, 200 Daily Simple Moving Average (DSMA) and then 1.6741, the 61.8% fib level. The sentiment will remain bearish in the long run as far as the 1.7191 resistance area is intact.
UK Retail Sales
The Retail Sales declined to 2.6% in July as compared to 3.4% in the same month of the year before, missing the median projection of 3.0%, a government report revealed today. Generally speaking, higher retail sales are considered positive for the economy, hence the worse than expected actual reading spurred selling pressure in the price of GBP/USD.
Market Economics will release the US Manufacturing Purchasing Managers Index (PMI) report today. According to the average forecast of different economists, the manufacturing activity in the world’s largest economy remained 55.7 points in August as compared to 55.8 points in the month before. Generally speaking, a reading above 50 shows expansion in the manufacturing activity and vice versa, hence a worse than expected actual outcome will be seen as bullish for cable.
Keeping in view the overall technical and fundamental outlook, buying the pair around the 1.6463 support area appears to be a good strategy in short to medium term as described above.