Cable Moves Lower on Soft PMI Print

Cable moved lower following a worse than expected PMI print, as the Markit August manufacturing PMI headline was softer down at 51.5, down from July’s 51.9 and back within a whisker of June’s two-year low. The market overlooked an above-forecast mortgage lending figure in July lending data from the BoE, and a rebound in lending to non-financial businesses.

Cable dropped below support near the early July low of 1.5330 on route to making an eight-week low of 1.5310. EUR/GBP lifted to a one-week high of 0.7373, since settling around 0.7350 but remaining some 50 pips net higher on the day.

The technicals have GBP/USD trading under pressure and poised to test target support near the June lows at 1.5162. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. The RSI (relative strength index) moved lower with price action reflecting accelerating negative momentum. The currency print of 35, is at the bottom of the neutral range.

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