Fiscal Crisis! GBP/USD Rebound Is an Illusion

Summary:

A business survey released Monday showed that the UK construction sector continued to contract sharply in June, though the pace of decline slowed slightly from the six-year low recorded in May.

SELL GBPUSD

EXP

TRADING

1.33916

Entry Price

1.28000

1.36000

1.33803 -0.00076 -0.06%

0.0

Pips

Flat

1.28000

Exit Price

1.33916

Entry Price

1.36000

Fundamentals

The UK’s June Construction PMI rose slightly from 38.2 in May to 38.4, remaining well below the 50-point threshold for several consecutive months, with industry output recording monthly declines since January 2025. Among the sub-indices, housing construction volume posted its sharpest decline since 2026, while civil engineering recorded its most severe contraction since April 2020 due to infrastructure delays and a reduction in public-sector tenders. Although the New Orders Index rose to a three-month high, the rate of decline remained steep, and employment fell for the 18th consecutive month.

On the U.S. side, the June ISM Services PMI came in at 54.0, remaining in expansionary territory for the second consecutive month, while the services employment index rebounded from 47.9 to 51.2, ending three consecutive months of contraction. CME tools indicate that the market is pricing in a nearly 80% probability of another Fed rate hike this year, contrasting with the weakness in the UK economy.

Technical Analysis

On the daily chart, the GBP/USD pair shows Bollinger Bands beginning to narrow, with moving averages flattening out, indicating a potential reversal at any moment. The RSI stands at 57, suggesting a predominantly optimistic market sentiment. On the four-hour chart, the Bollinger Bands are widening upward, moving averages are diverging upward, and the upward momentum of the MACD has weakened, making a further decline highly likely. The RSI stands at 71, indicating a market dominated by buyers. The trading strategy is to sell on rallies.

Fiscal Crisis! GBP/USD Rebound Is an Illusion_1

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.339

Target Price: 1.28

Stop-Loss Price: 1.36

Support Levels: 1.32, 1.3, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Fiscal Crisis! GBP/USD Rebound Is an Illusion

Risk Disclosure