GBP/USD – Aiming for New 6 Year Lows

GBP/USD – Aiming for New 6 Year Lows

GBP/USD – Aiming for New 6 Year Lows

Sterling started the week at a fresh 6 year low despite stronger than expected consumer credit and mortgage approvals. Brexit remains an overarching concern for the U.K. and its currency but the real test for the pound this week will be data. Manufacturing, service and construction sector PMIs are scheduled for release and if activity weakens, it could be the nail in the coffin for the pound. The PMI reports are some of the most market moving pieces of U.K. data and according to the Confederation of British Industry, manufacturing orders dropped by the largest amount in 4 months. If this data is right in predicting an overall slowdown in manufacturing activity, then data could pressure on sterling this week.

Technically lower highs and lower lows leaves GBP/USD firmly in a downtrend. With the 1.40 support level broken, the next stop for the currency pair should be the March 2009 low near 1.3660. A break above 1.4043 would be needed for a stronger recovery towards 1.4200.

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