Technical Analysis: GBPUSD

The British pound has found itself under pressure recently. Disappointing PMI readings published today and yesterday encouraged bears to take action. Services PMI missed expectations significantly. In addition, GBP moved lower in response to the speech of Mark Carney, Bank of England Governor, who said yesterday that trade tensions are increasing risks to the global economy - a remark that suggests that BoE may soon turn more dovish.
The GBPUSD currency pair is being pressured by weak macroeconomic data and the still unresolved Brexit case. Looking at D1 interval, the price launched another downward move after failing to break above the resistance zone at 1.2760. The pullback brought the pair back to the key support level (1.2570) marked with the right shoulder of the potential inverse head and shoulders pattern. In case the level halts the decline, an upward correction in line with the textbook scheme of the aforementioned formation may be on the cards.

Source: xStation5

On the lower time frame (H4), one can also see that the HSH pattern is already being played out. The price moved sharply lower following a break below the neckline. We can observe the reaction of the demand-side to the closest support level (1.2570). Nevertheless, the recent trend on the pair has been downward, so there is a chance that declines will continue. A break below the aforementioned support could invalidate setup from the higher timeframe and potentially lead to acceleration of the downward move.

Source: xStation5

Moving onto the intraday frame - H1, the aforementioned support zone at 1.2570 is additionally enhanced by the 78.6% Fibo level of the latest downward impulse. In case bulls managed to take control over the market, a potential upward correction could take the pair to as high as the 1.2645 handle, where the nearest resistance zone is localized. Note that the 50% Fibo level can be found in the very same place.

Source: xStation5