GBP/USD Forecast: Descending Trend-line Capping Up-move, Manufacturing PMIs In Focus

The GBP/USD pair gapped lower by around 30 pips at the start of a new trading week and remained capped below the 1.3400 handle amid some relatively lighter trading action. The US Dollar stood tall against its major counterparts, supported by growing market conviction for an additional Fed rate hike by the end of this year which seemed to be the only factor weighing on the major.

Traders now look forward to the important release of manufacturing PMI prints, from UK and the US, for some fresh short-term trading impetus. Given that the markets have already started pricing in another Fed rate hike in 2017, stronger-than-expected incoming US economic data should provide an additional boost to the US Dollar and continue keeping a lid on any sharp near-term up-move for the major.

From a technical perspective, the pair has been facing rejection at a short-term descending trend-line, which might continue to act as immediate resistance. A clear breakthrough the mentioned hurdle, currently near the 1.3400 handle, a bout of short-covering should lift the pair back towards an important hurdle near mid-1.3400s marking 23.6% Fibonacci retracement level of 1.2790-1.3657 up-move.

Alternatively, a clear break below 1.3350-40 area, leading to a subsequent weakness below 38.2% Fibonacci retracement level support near 1.3320 level, might continue to drag the pair towards its next major support near the 1.3215 region (50% Fibonacci retracement level).