GBP/USD fails to rise above 1.3300 and approaches weekly lows

Cable erased practically all gains during the American session after falling below 1.3250. GBP/USD peaked at 1.3291 but again, like it happened yesterday, lost momentum near 1.3300 and retreated. Near the end of the session fell to 1.3240.

The Pound remains among the weakest currencies despite today’s positive UK economic report. The Markit services PMI rose from 53.2 to 53.6, above expectations. However, the report was not enough to offset the Manufacturing and Construction PMI’s that dropped more-than-expected. In the US, the ISM Non-manufacturing surpass expectations while the ADP employment report dropped significantly in September to 135K from the 228K of August, but the number was in line with expectations, affected by hurricanes. Attention now turns to Friday’s NFP.

On Wednesday, the lack of strength of the US dollar limited the slide of GBP/USD. Greenback dropped during the Asian session but then found support following US releases. Uncertainty around who will be the Chair of the Federal Reserve after January is starting to impact on the Dollar. 

Technical outlook 

“The pair is within a consolidative phase, but with the scale lean towards the downside, as the recovery stalled well below a major Fibonacci resistance at 1.3340, and the risk won't change bias as long as the price remains below this level”, said Valeria Bednarik, Chief Analyst at FXStreet. 

According to her, the 4 hours chart, shows that the 20 SMA has extended its decline, now offering a dynamic resistance at around 1.3295, while the Momentum indicator aims higher within negative territory, but she notes that the RSI indicator has already turned south, anticipating some further slides ahead, to be confirmed on a break below 1.3220.