GBP/USD Forecast: Pound eyes fresh multi-year lows amid risk-aversion

GBP/USD has failed to shake off the bearish pressure after having modestly rebounded from the multiyear low it touched at 1.1569 earlier in the day. The risk-averse market environment is not allowing the British pound to find demand and the near-term technical outlook shows that there is more room on the downside for the pair.

The greenback lost some interest on Wednesday after the monthly ADP showed a smaller than expected increase in private sector employment in August. With Wall Street's main indexes suffering heavy losses on the last trading day of August, however, the dollar managed to stay resilient against its rivals and forced GBP/USD to stay on the backfoot.

The UK's FTSE 100 Index is down 1.6% in the European morning on Thursday and US stock index futures are losing between 0.6% and 1.2%, confirming the view that investors continue to seek refuge. 

Liz Truss, the frontrunner in the UK’s leadership race, said on Thursday that they would deliver "immediate support" to households to make sure that they could afford energy bills but this comment failed to help the mood improve.

Meanwhile, the S&P Global's UK Manufacturing PMI for August got revised higher to 47.3 from the initial estimate of 46. Nevertheless, market participants paid little to no attention to this data. The Bank of England’s (BOE) latest Decision Maker Panel revealed that overall business uncertainty, specifically related to the Russia-Ukraine war and Brexit, rose in August.

In the second half of the day, the ISM will release the US August Manufacturing PMI survey. Rather than the headline figure, which is expected to edge slightly lower to 52 from 52.8 in July, investors will likely react to the inflation component. The Prices Paid Index is forecast to decline to 55.5 in July from 60 and a lower-than-expected print could make it difficult for the dollar to continue to gather strength in the second half of the day. On the other hand, a strong producer inflation reading should support the dollar ahead of Friday's August jobs report.

GBP/USD Technical Analysis

GBP/USD continues to trade within the descending regression channel coming from early August and the Relative Strength Index (RSI) indicator on the four-hour chart stays well below 50, confirming the bearish bias. 

On the downside, 1.1550 (static level, mid-point of the descending channel) aligns as first support ahead of 1.1500 (psychological level).

Resistances are located at 1.1600 (psychological level, upper-limit of the descending channel) 1.1650 (20-period SMA) and 1.1700 (psychological level, static level).