GBP/USD - Bearish continuation pattern confirmed, eyes UK services PMI

GBP/USD daily chart shows the bearish flag breakdown.
The immediate focus on the UK services PMI release.

Omkar Godbole FXStreet Contributor

GBP/USD closed below 100-day MA on Thursday, courtesy of the Bank of England's (BOE) dovish rate hike. The spot closed at 1.3058 and traded around 1.3070 in Asia.

Bearish continuation pattern

A downside break of the inverted or bearish flag pattern indicates the sell-off from Sep. 20 high of 1.3657 has resumed. As per the measured height method, the downside break of the flag has opened doors for 1.2440 levels.

Focus on the UK services PMI

UK services PMI, due at 09:30 GMT, is expected to show the pace of expansion in the service sector activity cooled slightly to 53.3 in October from the September reading of 653.6.

A better-than-expected UK services may help Cable trim post-BOE loses. On the other hand, a weaker-than-expected services PMI would add credence to BOE's dovish forward guidance and could yield a drop below 1.30 handle.

Later in the day, the US wage growth numbers, due at 18:00 GMT, could yield big moves in the USD pairs.

GBP/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes - "The pair's 4 hours chart supports further declines ahead, as technical indicators barely decelerated their downward momentum once reaching oversold readings, where they stand, after the price broke below all of its moving averages, also below all of the Fibonacci that limited price action this last month."

Support levels: 1.3026 1.2985 1.2950

Resistance levels: 1.3075 1.3110 1.3150

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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