Daily Price Outlook
During Tuesday's Asian trading session, the sterling pair has gained 0.24%, trading around 1.2863.
The market is acting cautiously because of Wednesday's Federal Open Market Committee (FOMC) meeting.
July marked a five-month low for business activity in the United States. There was a fall from 53.2 to 52 in the S&P Global Composite PMI. The rise in the US S&P Global Manufacturing PMI from 46.3 to 49 was better than expected.
The Services PMI dropped from 54.4 to 52.4, below the consensus forecast of 54, and the Composite PMI also dropped from 53.2 to 52.
Some have speculated that the Federal Reserve may soon stop tightening monetary policy in response to recent economic statistics showing inflation is slowing and the labour market is tight.
Speculation is high that the Federal Open Market Committee will raise its benchmark rate by another quarter point at its meeting on Wednesday. However, Fed Chairman Jerome Powell will provide some hints about the potential for interest rate guidance during his news conference on Wednesday. The Fed's hawkish approach can set off the US dollar.
However, preliminary data from the UK's PMI indicated that economic activity in July was worse than anticipated. In July, the Manufacturing PMI dropped to 45.0 from June's 46.5, below the forecasted 46.1. This number marked the 12th consecutive month of industrial decline.
In the meantime, the Services PMI flash estimate fell to 51.5 from 53.0 previously and 53.7 forecasted.
On August 3, market participants expect the Bank of England (BoE) to raise its benchmark interest rate from 5% to 6%. But the Bank of England's latest rate increase adds to worries about the impact of the Bank's most aggressive rate hikes in three decades on the UK economy.
There hasn't been any major UK economic data released recently. Therefore the value of the USD will likely continue to affect the pair's movement. The DXY is down by -0.11% to 101.23, giving strength to the British pound against greenback.
Traders will also pay attention to the US CB Consumer Confidence report, the Advance GDP QoQ report, and the core Personal Consumption Expenditure (PCE) Price Index MoM report, the Fed's preferred inflation gauge.
These numbers may have a major effect on the dynamics of the US Dollar and guide the GBP/USD pair.
GBP/USD - Technical analysis
The GBP/USD pair has found robust support at the level of 1.2805 and has initiated a bullish rebound from this key level. This development indicates a potential resumption of the main bullish trend, which is aligned with the existing bullish channel evident on the chart.
As a result, the upcoming sessions are expected to witness a bullish trajectory, with positive targets identified at 1.2870, followed by 1.2935 and 1.3010.
However, it is worth noting that achieving the suggested targets will require additional positive momentum in the market.
Investors should be watchful of potential price action, as a break below the levels of 1.2805 and 1.2780 could signal a shift away from the bullish channel and a short-term decline in the price.
For today's trading activities, the anticipated range for the GBP/USD pair is expected to be between the support level of 1.2775 and the resistance level of 1.2930.
Traders are advised to closely monitor market movements and price behavior to make informed trading decisions during this period.
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