GBP/USD Forecast: 1.30 still seems elusive, UK PMI and FOMC hold the key

The US Dollar held steady and traded flat against a basket of major currencies during Asian session on Wednesday as investors refrained from placing big bets ahead of the key FOMC decision announcement later during the day. Although the Fed is universally expected to leave its benchmark interest rates unchanged but the accompanying rate-statement would be closely scrutinized for clues over June rate-hike move and would eventually determine the greenback's next leg of directional move.

On the economic data front, ADP report on private sector employment and ISM non-manufacturing PMI are due for release on Wednesday. Being considered as a precursor for Friday's official jobs report, the ADP report should trigger some volatile moves during early NA session on Wednesday.

GBP/USD

The pair on Tuesday bounced off sharply from a previous trading range resistance break-point, now turned support near 1.2865 region after surprisingly stronger UK Manufacturing PMI print, coming-in at 57.3 for April as compared to last month's 54.2 and 54.0 expected. Upbeat UK economic data attracted some fresh buying interest and helped the pair to reverse all of its losses posted on Monday, led by renewed concerns over a possible 'hard Brexit' scenario.

The pair subsequently moved back closer to last week's 7-month tops and was now seen consolidating just below mid-1.2900s as traders now look forward to the release of UK Construction PMI, later during the European session. The latest UK Construction PMI for April is expected to tick lower to 52.1 from 52.2 recorded in March, albeit a positive surprise cannot be ruled out.

Technically, the pair once again seems to have entered a consolidation phase. With short-term technical indicators gradually drifting lower, possibilities of corrective slide back below the 1.2900 handle still remains a distinct possibility. Below the said handle, 1.2865-60 region, also coinciding with 50-SMA (4-hourly), should continue to extend some immediate support. A follow through weakness below this important support is likely to accelerate the slide towards 1.2835 intermediate support, en-route the 1.2800 handle. Any further weakness should continue to attract fresh buying interest and hence, is likely limit the downslide at 1.2765-60 strong horizontal support, which if broken would negate near-term bullish bias and turn the pair vulnerable to extend its near-term corrective slide. 

On the flip side, bulls would be eyeing for a sustained move beyond mid-1.2900s, above which the pair seems all set to extend the ongoing appreciating move and head towards reclaiming the key 1.30 psychological mark. The bullish momentum could further get extended initially towards 1.3060-65 horizontal resistance ahead of the next major hurdle near 1.3085-90 region. 

EUR/USD

The prevalent positive sentiment surrounding the shared currency, in wake of Macron’s win in the first round of the French Presidential election, got an additional boost on news that Greece had reached an agreement to unlock the next tranche of bailout money. The pair, however, failed to break through the post-election consolidative range, above the very important 200-day SMA, and is currently holding closer to the top end of the said trading band as investors look for additional support from today's preliminary release of the first-quarter Euro-zone GDP print. 

On daily chart, the pair has been oscillating within 100-pips broader trading range over the past 1-1/2 week, clearly suggestive a consolidative phase before the next leg of near-term directional move. With the pair holding closer to its immediate strong hurdle near 1.0930-50 region, comprising of a short-term ascending trend-line and 61.8% Fibonacci retracement level of 1.1300-1.0341 downfall, a stronger-than-expected Euro-zone GDP print, coupled with a slight dovish Fed tilt, should trigger a wave of buying interest and lift the pair beyond the key 1.1000 psychological mark towards testing its next static hurdle near 1.1025-30 area.

Alternatively, reversal from current resistance area, leading to a subsequent drop below 1.0885-80 horizontal support, is likely to drag the pair towards the very important 200-day SMA critical support near 1.0835 region, which is closely followed by 50% Fibonacci retracement level support near 1.0820 level. On a convincing break below the mentioned support levels would negate any near-term bullish bias and is likely to accelerate the slide towards 1.0775-70 area, previous resistance now turned support, en-route 38.2% Fibonacci retracement level support near 1.0705-1.0700 region.