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GBP/USD clings to 1.3040 ahead of UK PMI, FOMC

  • Market turns cautious ahead of the key risk events like UK PMI and FOMC.
  • Sustained break of near-term trend-line portrays the pair’s strength.
In spite of registering heavy gains on Tuesday, the GBP/USD pair clings to 1.3040 while heading into the London open on Wednesday.

Buyers recently focused on positive Brexit headlines and the US Dollar (USD) pullback in order to propel the Cable.

However, caution remains on the card ahead of the monthly purchasing manager index (PMI) numbers and monetary policy meeting by the US Federal Open Market Committee (FOMC).Cross-party talks between the Tories and the opposition Labour party leader Jeremy Corbyn are likely turning to break the Brexit deadlock as not only PM May’s spokesperson but the EU lawmakers also expect the exit proposal to roll out soon.

Alternatively, some of the UK lawmakers are still trying hard to oust the British Prime Minister Theresa May from her position.

On the other hand, the USD couldn’t please buyers amid mixed data highlighting fears of another dovish appearance by the US Federal Reserve.

Risk sentiment remained dull as the US 10-year Treasury yield holds a 2.5% level after losing nearly 3 basis points yesterday.

Not only the expected dovish outcome of today’s FOMC but the likely weakness in the US ISM manufacturing PMI to 55.0 from 55.3 may also weigh on the greenback. Though, forecasts concerning the UK Markit manufacturing PMI are also not upbeat either and may hold the balance. The British gauge of manufacturing could slip to 53.0 from 55.1.

Technical Analysis

Pair’s slip beneath the immediate resistance-turned-support level of 1.3000 highlights 1.2970/60 area including 100-day and 200-day simple moving average (SMA) whereas 50-day SMA level of 1.3105, followed by 1.3130 and 1.3200, can being on bulls’ radar for now.