The GBP/USD currency pair remains in a consolidation phase, trading just above the 1.3100 level. The current technical setup does not indicate a significant recovery momentum, largely influenced by a market environment characterized by risk aversion, which may limit potential gains for the pair.
After reaching a weekly low beneath 1.3100 on Tuesday, the pair managed to close above this level. In the European trading session on Wednesday, it has seen a modest uptick as traders await the next significant market driver. The US Dollar held steady, displaying little change in response to the ISM Manufacturing PMI, which saw a slight increase to 47.2 in August from 46.8 in July. However, the prevailing risk-averse atmosphere, highlighted by substantial declines in key US stock indexes, has reinforced the USD and pressured GBP/USD lower.
During the European session, stock index futures in the US are showing declines ranging from 0.15% to 0.6%. Should safe-haven preferences persist among investors in the latter part of the day, the GBP/USD pair may struggle to maintain any upward momentum.
Attention now turns to the JOLTS Job Openings data for July, scheduled for release on Wednesday. Analysts anticipate around 8.1 million job openings at the end of July. A figure at or above 8.5 million could alleviate concerns regarding the labor market and potentially strengthen the USD in the immediate aftermath. Conversely, a disappointing result could weaken the USD and allow the GBP/USD to rise.
From a technical analysis perspective, the Relative Strength Index (RSI) shows signs of recovery, moving above 40 after touching 30 on Tuesday, indicating some hesitancy among sellers. Currently, GBP/USD hovers near 1.3130, where the Fibonacci 23.6% retracement aligns with the 20-period Simple Moving Average on the 4-hour chart. Should the pair manage to establish 1.3130 as a support level, the next target will likely be 1.3170, followed by 1.3200. Conversely, initial support is seen at 1.3100, with further levels at 1.3060 and 1.3040.
