GBP/USD clings to UK PMI-led recovery gains, focus shifts to ADP report

The GBP/USD pair held on to the upbeat UK PMI-led gains but seemed struggling to extend it further and remained capped below the 1.33 handle ahead of the US ADP report.

Against the backdrop of a mildly weaker tone around the US Dollar, today's slightly better-than-expected UK services PMI provided an additional boost to the pair's recovery move from near three-week lows touched in the previous session.

   •  USD: Softer tone guided by Fed chair uncertainty - BBH

The up-move, however, seemed lacking any strong follow through traction as investors seemed refraining from aggressive bets in anticipation of any surprise from today's ADP report on the US private sector employment.

Moreover, the lack of progress in the Brexit talks also did little to improve sentiment surrounding the British Pound and might have also collaborated towards keeping a lid on any sharp appreciating move for the pair, at least for the time being. 

   •  UK’s Rudd: Brexit transition deal is almost within reach - BBC Radio 5

Today's US economic docket also features the release of ISM non-manufacturing PMI, which followed by the Fed Chair Janet Yellen's speech, later during the day, should provide opportunities for short-term traders.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "the 4 hours chart shows that the price is stuck around a horizontal 200 EMA, usually a line in the san when it comes to define trend, while the 20 SMA maintains its bearish slope well above the current level, and technical indicators hold within negative territory, all of which maintains the risk towards the downside. Below 1.3220, should result in a test of September 14th low at 1.3146. To the upside, the pair has an immediate resistance at the daily high of 1.2385, with gains beyond it probably extending up to 1.3340, a major Fibonacci resistance."