Bias On Cable Is On The Downside As UK Manufacturing PMI Falls Further

• The GBP/USD is trading about 100 pips off its 33-week high at around mid-1.3200s, as delayed Brexit hopes recede.
• The GBP/USD made a massive 280 pips strong bull run since the beginning of this week with the technical oscillators favoring the end of the week correction.
• A technical correction is likely to see GBP/USD target previous cyclical high of 1.3215.
• The UK manufacturing PMI slipped further to 52.0 in February as an uncertain outlook impacted the business optimism.

The GBP/USD is trading little changed on the downside at around 1.3240 as the end of the week correction supported by above expectations strong US GDP rise in the fourth quarter last year and the UK manufacturing PMI weigh on the currency pair.

The US fourth-quarter GDP rose by 2.6% quarterly annualized rate, up from 2.2% expected and the Chicago Fed business activity index increased to 64.7 in February after falling to 56.7 in the previous month. The surprisingly strong US macro data supported the greenback across the board on Thursday afternoon.

The UK manufacturing PMI fell to 52.0 in February as Brexit uncertainty weighed on the manufacturing activity and employment, with confidence at a series-record low and the
rate of job losses hitting a six-year high.

With no major move on Brexit front, the major Brexit-related event is scheduled for March 12 with the UK parliament voting on renewed Brexit deal proposal from the UK Prime Minister Theresa May that increases the chances of delayed Brexit until; June.

The technical correction off a 33-week high is supported by the swing of the technical oscillators as a 280-pips strong move higher on GBP/USD is temporarily exhausted even with the prospects of delayed Brexit.

The technical oscillators including Momentum and the Relative strength index are turning lower from their elevated positions pointing downwards and Slow Stochastics made a bearish crossover within the Overbought territory. The most important technical feature though is the golden cross of the 50-day moving average crossing over the 100-day moving average (DMA). The golden cross is a strongly bullish technical signal that is expected to push Sterling higher long-term. In the short-term, the GBP/USD though is in corrective mode around mid 1.3200s before testing 1.3215, previous cyclical high. On the upside, the immediate target is at 1.3390 representing 61.8% Fibonacci retracement of post-Brexit recovery from 1.1800 to 1.4374.

GBP/USD Daily chart