GBP/USD Forecast: finds temporary support near 1.3050; ADP report eyed for fresh impetus

The GBP/USD pair once again managed to rebound from 1.3060-50 support area but continued with its struggle to build on to its recovery gains above and remained stuck around 1.3100 handle on Wednesday. The EUR/USD pair also attempted a recovery from nearly 3-week low touched late Tuesday during NY trading session.

On Tuesday, the greenback added on to its recent gains after the Conference Board’s consumer confidence index surprisingly climbed to 101.1 in August, the highest level since September 2015. The US Dollar got an additional boost after the Federal Reserve Vice Chairman Stanley Fischer reiterated that the central bank is moving closer to further raise interest rates but the decision would depend on the incoming economic data, though did not provide any clues over the possible timing of such a move.

Looking ahead, the closely watched US monthly employment report, due for release on Friday, now turn an important factor in determining the central bank's next monetary policy action. Hence, traders on Wednesday will keenly scrutinize the release of ADP report on US private sector employment, which is seen as a precursor to Friday's official jobs report. US economic calendar also features the release of Chicago PMI and pending home sales data later during NY trading session. Meanwhile, German retail sales and unemployment change, followed by the flash estimate of Euro-zone CPI print for August would be in focus during European session.

Technical outlook

GBP/USD

From current levels, momentum above 1.3120 immediate hurdle is likely to confront resistance at 50-day SMA near 1.3180-85 region, which if conquered has the potential to lift the pair beyond 1.3200 handle, towards testing 3-week high resistance near 1.3275-80 region before extending the appreciating move beyond 1.3300 round figure mark.

On the flip side, 1.3060-50 region remains immediate strong support to defend, which if broken is likely to accelerate the slide immediately towards 1.3000 psychological mark. A convincing break below 1.3000 mark would turn the pair vulnerable to extend its downslide towards retesting a very strong support near 1.2900 level.

EUR/USD

The pair is now sustaining its weakness below 100-day SMA and 50% Fibonacci retracement level of 1.0952-1.1366 recent up-move. Hence, remains vulnerable to extend its downslide further towards a strong confluence support near 1.1110-1.1100 round figure mark, comprising of 61.8% Fibonacci retracement level and the very important 200-day SMA.

Conversely, any recovery attempts might not confront immediate resistance at 100-day SMA support break point around 1.1180 region, above which the momentum could lift the pair back towards 38.2% Fibonacci retracement level resistance near 1.1220 level. A sustained move back above 1.1220 resistance would negate near-term bearish bias and accelerate the up-move immediately towards 23.6% Fibonacci retracement level resistance near 1.1265-70 region before eventually heading back above 1.1300 handle towards retesting recent high resistance near 1.1350 region.