GBP/USD Forecast: Up-move Might Now Be Capped At 1.3320 Level, UK Services PMI Eyed

The GBP/USD pair gained some positive traction during the Asian session on Wednesday and has now recovered majority of the previous session's slide to near three-week lows. The British Pound weakened across the board on Tuesday, dragging the pair to its lowest level since September 14, after the UK data showed activity in construction sector contracted for the first time in 13 months during September. The UK construction PMI missed consensus estimates and dropped sharply from previous month's reading of 51.1 to 48.1 in September, the lowest level since July 2016.

Meanwhile, a modest US Dollar retracement helped the pair snap three consecutive days of a losing streak and recover back above mid-1.3200s as investors now look forward to the release of the UK services PMI print, due later during the European session. From the US, the release of ADP report on private sector employment, ISM non-manufacturing PMI and the Fed Chair Janet Yellen's speech would also help traders grab some short-term trading opportunities. The key focus, however, would remain on the keenly-watched US monthly jobs report, due on Friday.

Technically, the pair is rebounding from an important support marked by 50% Fibonacci retracement level of is recent upsurge from 1.2774 to 1.3657. But with short-term technical indicators gradually drifting into negative territory, the recovery move runs the risk of fizzling out at higher levels. Hence, any up-move beyond 1.3280-85 level could lift the pair back above the 1.3300 handle but seems more likely to meet heavy supply at 38.2% Fibonacci retracement level resistance near 1.3320 level.

On the flip side, 50% Fibonacci retracement level, near the 1.3215-10 region, remains immediate support to defend, which if broken is likely to accelerate the fall towards 50-day SMA near the 1.3135 region en-route 61.8% Fibonacci retracement level support in the 1.3100 neighborhood.