GBP/USD rebounds despite UK PMI miss

• GBP/USD recovered four-tenths of a percent on Thursday.
• Markets bid up the Pound Sterling despite UK PMI figures missing the mark.
• US PMI data came in above expectations, limiting Greenback losses.

GBP/USD recovered some much-needed ground on Thursday, climbing 0.4% as Cable bidders grapple with keeping price action north of the 1.2900 handle. UK Purchasing Managers Index (PMI) figures broadly missed the mark early Thursday, but both the Services and Manufacturing PMI components held north of contraction territory below 50.0.

US PMI figures broadly beat expectations, containing US Dollar losses and keeping GBP/USD tied up just below 1.3000. US Manufacturing PMI activity figures rose to 47.8 in October, beating the expected 47.5 and climbing even further from August’s 47.3. Meanwhile, the Services PMI component bounced to 55.3, climbing from the previous month’s 55.2 and beating the expected decline to 55.0.

Meaningful UK economic data takes a break on Friday, leaving markets to contend with US Durable Goods Orders and an update to 5-year Consumer Inflation Expectations from the University of Michigan (UoM). Headline US Durable Goods Orders in September are expected to contract a full 1.0% MoM, extending the recent downturn after August’s flat-footed 0.0% print. October’s UoM 5-year Consumer Expectations are expected to come in close to their previous print of 3.0%.

GBP/USD price forecast

The GBP/USD pair is currently in a corrective phase after a significant bullish rally that peaked near the 1.3300 level in early October. Following the recent decline, the price has found support near the 200-day EMA (black line) at 1.2848, which could act as a key level for the pair in the coming sessions. The 50-day EMA (blue line) at 1.3057 is now positioned as an overhead resistance, and with the pair trading below this level, the short-term trend remains bearish. However, the price has managed to bounce slightly from the 1.2900 psychological level, signaling that buyers are stepping in to defend the 200-day EMA.

The MACD indicator is currently in bearish territory, with the MACD line (blue) sitting below the signal line (orange), and the histogram displaying negative momentum. This suggests that the bearish pressure is still prevalent. However, the recent narrowing of the MACD histogram indicates that selling momentum may be fading, and a potential bullish crossover could materialize if the pair holds above the 1.2848 support level. A daily close below this support would likely accelerate the downward move toward the 1.2700 area, while a rebound above the 1.3050 resistance could reinvigorate the bulls, aiming for the 1.3200 zone.

GBP/USD daily chart