The pound sterling is on a five-day losing streak against the US dollar, the downtrend started on August 11th, and the price has lost 5.49% since then. Fundamental factors suggest that the downtrend will continue in the short term.
The UK released S&P Global Manufacturing PMI earlier in the trading sessions with a better than expected result of 47.3; analysts' consensus was at 46; however, the figure is below 50, indicating that there is a contraction in the manufacturing sector in the UK, negatively impacting the exchange rate of GBPUSD.
The US released Initial Jobless claims this morning; the result came out at 232K while the experts anticipated 248K. The US continues showing a solid labor market, holding up the US economic activity. The USD continues strengthening across all Forex major pairs.
The US also released S&P Global Manufacturing PMI with better than expected results of 51.5; the expert consensus was at 51.3. It is a slight improvement from the previous month. Still, most importantly, the figure is above 50, indicating that the overall health of the US economy is solid and continues to grow.
The short and long-term moving averages are above the current price, strengthening the short signals. The trend lines crossed four sessions ago, which suggests that the downtrend is likely to continue.
The Bollinger bands are wide and continue to move downwards, indicating that the price is likely to continue the downtrend; however, the price is trading very close to the lower band, which often suggests that the price is relatively low. We wouldn't be surprised to see a retracement in the upcoming sessions, but this will allow the USD to gather strength and continue the downtrend in the medium to long term.
The relative strength index is at 26% and is considered oversold; the market sentiment could change in the short term, causing a temporary pullback. The pair could reach the support level at 1.14098, the previous low from March 2020.
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