GBP/USD rallies amidst Greenback weakness on upbeat market mood

GBP/USD rallies amidst Greenback weakness on upbeat market mood

Time Stamp: October 4, 2023 4:02 PM
Source Node: 2917084

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  • GBP/USD rebounds from a daily low of 1.2037, despite UK Services PMI and Composite figures indicating a contraction in business activity.
  • US ADP Employment Change report and ISM Non-Manufacturing PMI reveal a slowdown in private sector hiring and service sector activity, respectively.
  • Despite the lack of supportive UK economic data, the GBP finds support amidst a generally weakening US Dollar and positive market sentiment.

The Pound Sterling (GBP) rallies against the US Dollar (USD) even though the latest round of UK economic data didn’t support the advance of Sterling, but overall weakness on the Greenback keeps most G8 FX currencies underpinned. The GBP/USD is trading at 1.2135 after sliding to a daily low of 1.2037 earlier in the European session.

Pound Sterling ascends against the US Dollar, reaching 1.2135, as the Greenback's overall weakness and upbeat market sentiment overshadow uninspiring UK economic figures

An upbeat market sentiment is also boosting the British Pound. The latest UK economic docket showed that business activity slightly improved, as S& Global /CIPS revealed. The Services PMI and Composite figures jumped but remained below the 50 expansion/contraction threshold, it showed that consumer spending is shrinking.

In the United States, private sector hiring slowed in September, as indicated by the ADP Employment Change report, with a gain of 89,000 jobs. This figure was below the estimated 153,000 jobs and declined from August 177,000. Additionally, the ISM Non-Manufacturing PMI reported a business activity index of 53.6 in the services sector for September, which was as expected but decreased from the previous month's reading of 54.5.

GBP/USD Price Analysis: Technical outlook

The GBP/USD remains tilted to the downside from a daily chart standpoint. Still, price action during the last couple of days formed a ‘bullish engulfing’ candlestick chart pattern, suggesting that further upside is expected. Next, resistance emerges at the 1.2200 figure, followed by the October 2 high at 1.2219. Once those levels are cleared, the major could challenge September 29, the last cycle high at 1.2271, which could pave the way to test the 200-day moving average (DMA). Nevertheless, if GBP/USD remains below 1.2270, that could pave the way to test 1.2000, followed by the year-to-date (YTD) low of 1.1802.

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