Daily Analysis GBPUSD - 26 July 2023

The data released earlier this week revealed that economic activity in the United Kingdom was weaker than expected. The Manufacturing PMI for July declined to 45.0 from June's figure of 46.5, falling short of the anticipated 46.1. This marks the 12th consecutive month of contraction in the manufacturing sector. Additionally, the preliminary Services PMI for July dropped to 51.5 from the previous reading of 53.0, missing the expected 53.7.

In June, the Bank of England (BoE) took the markets by surprise when it raised its Bank Rate by 50 basis points (bps) to 5.00%. This prompted investors to quickly factor in a terminal rate of 6.50%. The BoE's aggressive rate hikes, the most significant in three decades, have raised concerns about their potential impact on the UK's economy and put pressure on the pound sterling.

Nonetheless, according to the latest Reuters poll, 42 out of 62 economists predict that the Bank Rate will see a 25-bps increase to 5.25% during the upcoming BoE meeting scheduled for August 3. In contrast, only 20 economists predicted a half-point hike.

The GBP/USD has found support at the 1.2800 level, which is now acting as new support after previously serving as a resistance level. This development is a positive sign for the continuation of the bullish long trend. If the price manages to break out above this level, it is likely to move towards the 1.2980 mark.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2800	1.2750	1.2650