- GBP/USD has gathered recovery momentum following Monday's sharp decline.
- The US data could impact the dollar's valuation ahead of the Fed's policy announcements.
- US stock index futures trade in positive territory in the early European session.
GBP/USD has reversed its direction and climbed above 1.1500 on Tuesday after having closed the first day of the week deep in negative territory. The pair's near-term technical outlook shows that sellers are struggling to dominate the action and additional recovery gains could be witnessed if risk flows continue to dominate the markets in the second half of the day.
The positive shift witnessed in market mood amid the better-than-expected Chinese PMI data and heightened optimism about China possibly easing coronavirus restrictions caused the greenback to lose interest early Tuesday. Additionally, the Reserve Bank of Australia's (RBA) decision to raise its policy rate by only 25 basis points (bps) seems to have triggered a risk rally. Reflecting the broad-based USD weakness, the US Dollar Index was last seen losing 0.5% on the day. Meanwhile, US stock index futures are up between 0.6% and 1%, suggesting that Wall Street's main indexes could open decisively higher and force the greenback to stay on the back foot.
The US economic docket will feature the ISM's October Manufacturing PMI survey. The disappointing S&P Global Manufacturing PMI weighed on the dollar in late October and a similar reaction could be witnessed in case the ISM Manufacturing PMI comes in below 50. On the other hand, an upbeat reading could help the USD show some resilience against its rivals but markets could refrain from betting on a steady dollar rally ahead of the Federal Reserve's policy announcements on Wednesday.
The US Bureau of Labor Statistics Job Openings and Labor Turnover Summary (JOLTS) report will also be looked upon for fresh impetus. In September, job openings are forecast to fall to 10 million from 10.05 million in August. A print below 10 million could trigger a short-lasting dollar selloff and vice versa.
GBP/USD Technical Analysis
GBP/USD faces initial resistance at 1.1550 (static level, 20-period SMA on the four-hour chart). With a four-hour close above that level, additional buyers could come into play and help the pair push higher toward 1.1600 (psychological level, static level) and 1.1650 (static level, the end-point of the latest uptrend).
Supports are located at 1.1500 (Fibonacci 23.6% retracement, psychological level), 1.1450 (50-period SMA) and 1.1435 (Fibonacci 38.2% retracement).
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