GBP/USD: Sterling lowest since mid-January as manufacturings slows, clouding the rate hike expectations

• The UK manufacturing PMI decelerated sharply to 53.9 in April weighing on GBP/USD.
• GBP/USD is heading lower after the first quarter GDP disappointed decreasing the chances of the Bank of England raising the Bank rate on may 10, 2018.

The GBP/USD is trading down 0.5% at around 1.3685 after the UK manufacturing PMI decelerated unexpectedly to the lowest level in 17 months printing the 53.9 for April, down from 54.8 in March.

The unexpectedly strong slowdown in the UK manufacturing activity in April adds to the series of the negative UK-related macro news of last weeks that dim the rate hiking chances for the Bank of England to go ahead with 25 basis points rate hike on May 10, when the Bank releases the quarterly Inflation Report.

GBP/USD levels to watch

With GBP/USD trading down 0.5% on Tuesday breaking below 1.3700 psychological level, the GBP/USD is likely to target 1.3658  representing September 20, 2017 high before testing round gib figure of 1.3600 and testing 1.3570 representing 50% Fibonacci retracement of a greater move higher from 1.2740 to 22-month high of 1.4377. On the upside, the next hurdle emerges at 1.3931  representing a 10-day simple moving average, before testing the round big figure of 1.4000 and finally 1.4053 representing the 21-day simple moving average.