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GBP/USD – Pound Slips to 6-Week Low

The British pound remains under pressure. On Thursday the pair touched a low of 1.2921, its lowest level in six weeks. Will the slide continue?
Kenny Fisher

GBP/USD is trading quietly on Friday. The pair is currently trading at 1.2943, up 0.10% on the day.

Pound Falls Despite Strong Services PMI

The pound declined on Thursday and touched a low of 1.2921, its lowest level since December 24. The Services PMI  improved to 53.9, its best reading since September 2018. Still, this wasn’t enough to prevent the pound from losing ground. This week also pointed to acceleration in manufacturing and construction as the Manufacturing PMI and Construction PMI both improved in December.  The pound is down close to 2 percent week.

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Technical Analysis

GBP/USD is under pressure and has retreated from the 1.30 line, which has psychological significance. The 50-EMA line is at 1.3024, followed by a resistance line at 1.3075. On the downside, there is support at 1.2902, followed by a support level at 1.2850. The 200-day EMA is situated at 1.2828.

Pacific Currencies – Daily Summary

USD/CNY

The Chinese yuan has had a roller-coaster week, but has settled down. Currently, the pair is trading at 6.9812, up 0.17% on the day. China’s trade balance is tentatively scheduled to be released on Friday, but this could be delayed until early next week. The trade surplus is expected to narrow to 306 billion yuan in January, down from 329 billion a month earlier. On the technical side, the 50-day EMA and 200-day EMA lines have both hit the daily candlestick and are in close proximity. If the 50- EMA line breaks below the 200-EMA, it would be a bearish signal for USD/CNY.

AUD/USD

AUD/USD is down slightly in the Friday session. Currently, the pair is trading at 0.6712, down 0.26% on the day. The AIG Services PMI slowed to 47.4 in January, down from 48.7 a month earlier. This marks a second consecutive month that the services sector has been in contraction. Elsewhere, the RBA lowered its growth forecasts in its quarterly monetary policy statement. The bank slashed the June 2020 forecast from 2.6% to 1.9%, citing the recent drought, bushfires and the coronavirus as reasons for the lower forecast. The December 2020 forecast was trimmed from 2.8% to 2.7%.

NZD/USD

NZD/USD has fallen slightly on Friday. Currently, the pair is trading at 0.6443, down 0.25% on the day. In economic news, New Zealand Inflation Expectations, improved to 1.93%, after slowing for five consecutive quarters. The third-quarter reading was 1.8 percent.

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