GBP/USD refreshes lows near 1.2920 on poor UK construction PMI

The bears regain footing following the release of worse-than expected UK construction PMI report, knocking-off the GBP/USD pair back towards 1.29 handle.

GBP/USD: BOE rate hike likely?

The recovery in the GBP/USD pair lost steam near 1.2960 levels, as the sentiment around the pound was hit by downbeat UK construction PMI data, which showed that the recovery mode in the UK’s construction sector activity faltered in June. UK construction PMI stalls rebound in June, misses expectations

A negative UK construction PMI report doesn’t come as a surprise, after yesterday’s dismal manufacturing PMI reading, as the construction PMI has widely shown the similar behaviour as the manufacturing and services PMIs. UK manufacturing PMI hits 3-month lows in June, a big miss on expectations

Cable now wavers near daily lows of 1.2919, with the bears eyeing a test of 1.2900 levels, as the latest set of PMI reports have disappointed markets and dampened expectations of a BOE rate hike anytime soon.

On the other hand, the US dollar regains momentum across the board, following a positive surprise delivered by the US ISM manufacturing PMI data, re-igniting hopes of a Sept Fed rate hike.  US: ISM manufacturing index jumps to 57.8 in June - Nomura

Looking ahead, downbeat UK fundamentals coupled with monetary policy divergence will continue to weigh down on the major, in absence of key catalysts in the session ahead, as the US markets remain closed today on account of Independence Day.

GBP/USD levels to consider             

To the upside, the immediate resistance is the 1.2955 (daily tops) followed 1.2987 (5-DMA) and then 1.3030 (5-week tops). On the downside, support could be located at 1.2917 (Jun 29 low), 1.2900 (round number) and 1.2886 (10-DMA).