The GBP/USD broke below the lower boundary of the upward sloping trend channel and it is now crawling below that trendline in a parallel upward sloping channel with short-term technical indicators pointing to further weakness in the currency pair.

The fundamental weakness of Sterling is given by slowdown in the economic indicators including forward-looking PMI surveys. Even with the UK manufacturing PMI beating the marking slight month-to-month increase with PMI rising to 55.1 in March from a downwardly revised reading of 55.0 in February on Tuesday, the prospects for Wednesday’s construction PMI are darker.

The GBP/USD is trading flat at around 1.4060 against the US Dollar ahead of the UK construction PMI figures that are scheduled for later on Wednesday and it is expected to decelerate to 50.8 in March, down from 51.4 in February. With reading near 50 level, the UK construction will be judged to be on the brink of recession and that is bad news for Sterling.

The very short-term technical indicators on the 1-hour chart point to a further potential on the downside for GBP/USD from here. Momentum has turned higher on 1-hour chart and while recent decline from 1.4088 intraday high marked Bearish crossover on Slow Stochastic that are pointing together with the Relative Strength Index lower.While GBP/USD is trading at mid-1.40’s the pair might be testing the key psychological support of 1.4000 near term, especially as the US market will see the ADP private employment report later on Wednesday with massive 208K new jobs created in the US economy in March.

GBP/USD 1-hour chart

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