GBP/USD Forecast: Buyers refrain from betting on a steady rebound

GBP/USD has staged an upward correction after having slumped to its weakest level in over two years at 1.1500 on Thursday. The positive shift witnessed in risk sentiment helps the British pound stay resilient against the dollar early Friday but the technical outlook doesn't yet point to a bullish tilt in the near term.

The unabated USD strength forced GBP/USD to suffer heavy losses on Thursday. The bigger-than-expected decrease in the weekly Initial Jobless Claims data triggered a leg higher in the US Dollar Index in the early American session and the upbeat ISM Manufacturing PMI survey provided an additional boost.

The ISM's report revealed that the business activity in the manufacturing sector continued to grow in August at a similar pace to July. Additionally, the Employment Index of the survey jumped to 54.2 from 49.9, raising hopes for a strong August jobs report.

The US Bureau of Labor Statistics' (BLS) monthly publication is expected to reveal a 300,000 increase in Nonfarm Payrolls in August following July's growth of 528,000. The Unemployment Rate is forecast to remain unchanged at 3.5% in the same period. 

Although a better-than-forecast NFP print could help the dollar outperform its rivals, investors could look to book their profits following the initial reaction and help the currency limit its losses. On the other hand, disappointing jobs report with a weak NFP figure could trigger a dollar selloff in the American session and open the door for an extended recovery in GBP/USD.

Meanwhile, US stock index futures are trading virtually unchanged on the day. The labour market data's impact on risk perception could also influence GBP/USD's action ahead of the weekend. An improvement in risk mood with Wall Street's main indexes posting strong gains after the opening bell could make it difficult for the dollar to find demand.

GBP/USD Technical Analysis

The last four four-hour candles closed in positive territory but the Relative Strength Index (RSI) indicator stays well below 50, pointing to the lack of bullish momentum. Moreover, GBP/USD stays within the descending regression channel coming from early August.

On the upside, key resistance seems to have formed at 1.1600, where the upper limit of the descending channel meets the 20-period SMA. With a four-hour close above that level, buyers could show interest and lift the pair toward 1.1650 (static level) and 1.1700 (psychological level, 50-period SMA).

Supports are located at 1.1540 (middle-point of the descending channel), 1.1500 (psychological level, multi-year lows set on Thursday) and 1.1450 (lower limit of the descending channel).