GBP/USD Price Drops from 1.2400 After Dismal Services PMI

• The GBP/USD pair could turn to the downside if it stays below the immediate upside obstacles.
• The UK and US data could shake the markets.
• A larger drop could be activated after dropping below the pivot point.

The GBP/USD price is trading at 1.2345, above yesterday’s low of 1.2323. The bias remains bullish in the short term as the Dollar Index remains under pressure.

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The DXY registered a larger correction, which is why the USD depreciated over its rivals. Fundamentally, the manufacturing and services data could be decisive today. The UK Flash Services PMI dropped from 49.9 points to 48.0 points signaling further contraction, while Flash Manufacturing PMI is expected to increase from 45.3 points to 45.4.

These are seen as high-impact and should bring sharp movements in the GBP. Earlier, the United Kingdom Public Sector Net Borrowing came in at 26.6B versus the 22.3B forecasted.

Later today, the US Flash Services PMI is expected to jump from 44.7 points to 45.3 points, while Flash Manufacturing PMI may drop to 46.0 points from 46.2 points.

So, the US manufacturing and services sectors should remain in contraction, which could be bad for the USD.

Yesterday, the USD received a hit from the CB Leading Index. The indicator reported a 1.0% drop versus the 0.7% drop expected.

GBP/USD price technical analysis: Bearish breakout

The GBP/USD pair found support on the weekly pivot point of 1.2330. Now it has retested the broken uptrend and upper median lines (UML). These represent upside obstacles, so testing and retesting these levels may announce a sell-off.

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False breakouts could announce that the rebound ended and that the sellers could take the lead. The 1.2435 – 1.2443 zone is seen as a major resistance area. As long as it stays below these historical levels, the rate could drop again. Also, the descending pitchfork’s median line (ml) acts as a magnet and could attract the price.

So, if the rate stays below the upper median line (UML), it could register a new leg down. Still, a larger drop could be activated only by a valid breakdown below the weekly pivot point of 1.2330.

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