- GBP/USD edged lower in the European morning but held above 1.2800.
- Sellers could retain control in case the pair fails to reclaim 1.2830.
- Markets await JOLTS Job Openings and ISM Manufacturing PMI data from the US.
Following Monday's indecisive action, GBP/USD edged slightly lower in the European morning on Monday. In the second half of the day, key macroeconomic data releases from the US could impact the US Dollar's (USD) valuation and drive the pair's action.
Following the disappointing Chinese PMI data, markets seem to be staying away from risk-sensitive assets, helping the USD stay resilient against its rivals. In the European session, the UK's FTSE 100 Index is down 0.4% and US stock index futures are losing between 0.3% and 0.4%.
The ISM Manufacturing PMI in the US is expected to improve marginally to 46.8 in July from 46 in June. If that data comes in above 50 and shows an expansion in the manufacturing sector's business activity, the USD could continue to gather strength. On the other hand, a disappointing print closer to 40 could revive recession fears and weigh on the greenback.
JOLTS Job Openings data for June will also be featured in the US economic docket. Since it will be released at the same with the PMI report, it could be difficult to assess the market reaction. Nevertheless, a reading near 10 million would confirm tight labor conditions and provide a boost to the USD, while a decline toward 9 million could have the opposite effect on the currency.
In case safe-haven flows continue to dominate the financial markets following the US data, the USD is likely to hold its ground, even if the initial reaction suggests otherwise.
GBP/USD Technical Analysis
The 200-period Simple Moving Average (SMA) on the four-hour chart aligns as a key pivot point at 1.2830 for GBP/USD. If the pair confirms that level as resistance, next bearish targets could be set at 1.2800 (psychological level, Fibonacci 61.8% retracement of the latest uptrend) and 1.2760 (July 28 low).
On the flip side, 1.2870 (Fibonacci 50% retracement, 50-period SMA) could be seen as first resistance ahead of 1.2900 (psychological level) and 1.2930 (100-period SMA; Fibonacci 38.2% retracement), once GBP/USD stabilizes above 1.2830.
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