GBP/USD Forecast: Bulls might now aim for a move beyond 1.3000 mark

The GBP/USD pair had some good two-way price moves on Wednesday and was influenced by a combination of diverging factors. The chaotic end of the first US presidential dented investors' appetite for perceived riskier assets and drove some haven flows towards the US dollar, which, in turn, prompted some selling around the major. The British pound was further weighed down by the BoE Governor Andrew Bailey's dovish comments on Tuesday, saying that policymakers have not ruled out the possibility of using negative interest rates. On the economic data front, the UK Q2 GDP print was revised higher to -19.8% from -20.4% estimated previously, albeit did little to impress the GBP bulls.

However, the recent optimism over a Brexit deal extended some support to the major and helped limit any deeper losses. Hopes of Brexit deal were further lifted by reports that both sides had been able to engage more closely on the contentious issues of fishing opportunities and state aid. The pair managed to find decent support near the 1.2800 mark after the BoE's chief economist, Andy Haldane downplayed expectations of negative rates in the short-term. Haldane further added that any decision on negative rates is likely to take months and would depend on cost-benefit analysis. This, coupled with a turnaround in the equity markets, pushed the pair back above the 1.2900 mark.

The global risk sentiment got a strong boost from upbeat US macro data and renewed hopes for the US fiscal stimulus. the ADP reported that private-sector employment grew by 749K in September as against 650K expected. Separately, the final GDP report showed that the economy contracted by 31.4% annualized pace during the second quarter of 2020 vs. -31.7% estimated. Adding to this, Chicago PMI jumped to the highest level since the end of 2018 and came in at 62.4 in September, reflecting the resilience of the broader US economy. Adding to this, The US Treasury Secretary Steven Mnuchin told reporters that talks with House Speaker Nancy Pelosi made a lot of progress on long-awaited COVID-19 relief legislation.

The pair rallied around 140 pips from daily swing lows and edged higher for the fourth consecutive session on Thursday. The momentum lifted the pair to near two-week tops during the Asian session as investors now look forward to the final UK Manufacturing PMI for some impetus. Later during the early North American session, the US macro data will influence the USD price dynamics and contribute to produce some meaningful trading opportunities. Thursday's US economic docket highlights the release of features the release of Initial Weekly Jobless Claims, core PCE Price Index and the ISM Manufacturing PMI. Apart from this, the incoming Brexit-related headlines and developments over the next round of the US fiscal stimulus could infuse some volatility.

Short-term technical outlook

From a technical perspective, the pair has already confirmed a near-term bullish breakthrough a three-week-old descending trend channel and seems poised to climb further. The ongoing positive momentum might now assist the pair to make a fresh attempt to conquer the key 1.3000 psychological mark. The mentioned level coincides with the 50% Fibonacci level of the 1.3482-1.2676 recent pullback, which if cleared decisively will set the stage for additional gains. The pair might then aim to reclaim the 1.3100 mark before extending the momentum towards the 61.8% Fibo. level, around the 1.3160-70 region.

On the flip side, pullbacks from higher levels might now find some support near the 1.2900 mark. Any subsequent fall might be seen as a buying opportunity and remain limited near the 23.6% Fibo. level, around the 1.2870-65 region. That said, a sustained breakthrough might turn the pair vulnerable to retest the overnight swing lows, around the 1.2800 mark. Some follow-through selling should pave the way for a move back towards challenging the very important 200-day SMA, en-route the 1.2700 mark and multi-week lows around the 1.2675 region.