GBP/USD plunges to nearly three-month low after US data

The GBP/USD pair's attempted recovery to 1.2900 handle got sold into and the pair has now dropped to a nearly three-month lows following the release of US ISM manufacturing PMI.

Currently trading at a fresh session low near 1.2825 level, the pair came under renewed selling pressure after US ISM manufacturing PMI for September moved back to expansion territory and jumped to 51.5 as against 50.3 expected and an unexpected drop to 49.4 in August. 

Earlier during European session, the pair got some respite from surprisingly stronger UK manufacturing PMI print for September. The recovery, however, turned out to be short-lived and the pair came under renewed selling pressure amid concerns of 'hard' Brexit following Sunday's comments from Britain's Prime Minister Therese May hinted towards the timing of initialing the process of ending UK's association with European Union. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The 1 hour chart shows that the price is well below a bearish 20 SMA, while technical indicators have resumed their declines within bearish territory after correcting oversold readings, maintaining the risk towards the downside. In the 4 hours chart, technical indicators head sharply lower, despite being in oversold levels, while the 20 SMA has accelerated its decline above the current level, all of which supports a retest of the 31-year low of 1.2793 posted last July."

"Support levels: 1.2845 1.2795 1.2750
Resistance levels: 1.2890 1.2940 1.2980"