GBP/USD Plunges 140 Pips Before Rebounding Above $1.2700

<p>&nbsp;The price chart of the GBP/USD currency pair showed a daily plunge of up to 140 pips in the European session yesterday.</p><p><br /></p><p>This was due to the release of service manufacturing PMI data in the UK which followed previous dismal readings in the European zone.</p><p><br /></p><p>Services activity in the UK recorded its slowest expansion in 6 months while manufacturing continued to experience a sluggish decline, marking the sector's 13th consecutive month of contraction.</p><p><br /></p><p>Because of that, the price is seen to have plunged from the 1.27600 level to almost touching the 1.26000 level.</p><p><br /></p><p>However, as expected by analysts, there was a price reaction at the 1.26000 support zone when the price that reached 1.26200 jumped again by more than 100 pips above the 1.27000 level again.</p><p><br /></p><p>The situation was due to the reaction to the same data published for the United States (US) with both readings for the manufacturing and service sectors also experiencing declines for August.</p><p><br /></p><p>Thus, the US dollar, which significantly weakened in the New York session, raised the price again before the price leveled off and closed the end of the trading session at around 1.27200.</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>Continuing trading in the Asian session this morning (Thursday), the price hovered slowly above the 1.27000 zone, but remained below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the GBP/USD chart.</p><p><br /></p><p>If the rise successfully continues past the MA50 barrier, it will be a signal for a bullish movement of the price again for the 1.28000 zone waiting to be tested again.</p><p><br /></p><p>If the price finally succeeds in breaking through the wall of resistance, then the rise to the latest higher level will be witnessed with a call for the price towards 1.29000.</p><p><br /></p><p>On the other hand, if the price plunges again at the end of this week's trading, a drop below 1.27000 will expect the price to go down to test the 1.26000 support zone again.</p>