After GBP/USD started the year by blasting the triple top and reaching a 16 month high, its fate changed and it became all downhill. The latest leg down came from a weak services PMI figure. After a drop of 360 pips, will 1.60 provide support?
GBP/USD is now trading at 1.6019, down from a peak of 1.6380 a few days ago.
GBP USD Free Falling – Click image to enlarge
The announcement of the fiscal cliff deal turned out to be an opportunity to sell. Doubts about the deal, together with weak figures from the UK and the not-so-dovish FOMC minutes hurt the pound.
Services PMI came out at 48.9 points, below the 50 point line separating between contraction and growth. This was worse than 50.4 points that was expected. This is important as this is the biggest sector. Also the construction sector disappointed with a score under 50 yesterday.
The 1.60-1.63 has characterized the pair several times in recent years. If 1.60 is broken, there is some support at 1.5910, with more serious support at 1.58. For more on the pair, see the British Pound forecast.
