GBP/USD off lows, still weaker below 1.30 mark ahead of US ISM

The GBP/USD pair extended disappointing UK manufacturing PMI-led downslide and dropped to fresh session low near 1.2940 level.

The pair stalled its recent upsurge and came under some fresh selling pressure on Monday as sentiment surrounding the British Pound got a hit after the UK data revealed a sharp deterioration in the manufacturing activity during the month of June. In fact, the Markit UK manufacturing PMI dropped to a 3-month low level of 54.3 in June, down from May’s 56.3 and worse than 56.5 expected. 

With the US Dollar starting the week on a strong footing, bulls failed to lift the pair further towards yearly tops resistance near mid-1.3000s. This coupled with today's dismal UK data prompted traders to take some profits off the table, especially after last week's strong upsurge of around 325-pips led by the BoE hawkish tilt.

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The selling pressure seems to have abated, for the time being, with the pair recovering few pips to currently trade around 1.2975 region after the BOE Governor Mark Carney spoke about the accomplishments of the Financial Stability Board.

Traders now look forward to the US economic docket, highlighting the release of US ISM manufacturing PMI, for some fresh trading impetus ahead of the BOE Chief Economist Andy Haldane's remarks at the closing of Bank of England's research conference.

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Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "the 4 hours chart for the pair shows that the price is hovering around a bullish 20 SMA, while the RSI indicator turned sharply lower from overbought levels, now at 59, as the Momentum indicator is about to cross its mid-line towards the downside, not enough to confirm additional slides. A break below the mentioned Friday's low, however, should signal a downward extension towards 1.2900/10 in the short term, while below this last 1.2860 comes next. To the upside, 1.3000 is the immediate resistance, followed by the 1.3040/50 region, where strong selling interest waits."