GBP/USD Strategy: Diverging Economic Scenarios Lead to Renewed Weakness in GBP/USD

Fundamental Analysis

On Monday, the US November ISM Manufacturing PMI rose from 46.5 to 48.4, exceeding market expectations of 47.5. This suggests that the Federal Reserve's rate cuts are beginning to show mild effects. Combined with Federal Reserve Governor Waller's support for a December rate cut, the market believes that weak manufacturing will receive further support, maintaining the resilience of the US economy, which benefits the US dollar.

Meanwhile, the UK's November Manufacturing PMI was revised down to 48, marking the largest contraction in nine months. Additionally, the UK Labour Party's £40 billion tax hike proposal has already undermined market confidence in the pound. This recent data further weakens the pound, suggesting that the recent rebound in GBP/USD may come to an end.

Technical Analysis

On the hourly Bollinger Bands chart, GBP/USD formed a head-and-shoulders pattern after failing to break the recent high during its second upward attempt. The price then dropped below the middle band and continued downward, with the channel turning bearish. As the trend shifts from bullish to bearish, traders without positions may consider entering short positions near intraday resistance levels.

Trading Recommendation

Entry: Short at 1.2658

Target: 1.2600 Stop-loss: 1.2695

Support Level: 1.2600 Resistance Level: 1.2691

Disclaimer: The above content is for reference only and does not represent the platform’s stance. Stick to your own strategy and ensure proper risk management.