GBP/USD is firming up into key resistance but lacks conviction

• GBP/USD stalls at a key area of daily confluence-resistance.
• Eyes on US data following Powell's hawkish message.

GBP/USD is down on the day but reviving. At 1.1717, the pound is making its way from the lows of the day which has been 1.1648, travelling to 1.1743 at the star of new York. Markets in the UK being closed for Summer Bank Holiday have left volumes thin but the US dollar has been pressured supporting its rivals thus far.

Currently, stocks on Wall Street are showing their fragility to last week's speech from the Federal Reserve's chairman Jerome Powell which dominates the start of the weeks business leaving US data as the key focus. Markets are focused on the end of the week, when the ISM's national manufacturing reading for August will be released on Thursday followed by the all important monthly employment report on Friday ahead of the long holiday weekend. Additionally, there will be various Fed speakers this week and traders will be tentative to complimentary rhetoric to Powell's hawkish message.

For US obs, analysts at TD Securities expect employment to advance robustly in August but at a more moderate pace following the booming 528k print registered in July. ''High-frequency data, including Homebase, point to still above-trend job creation. We also look for the UE rate to drop by a tenth for a second consecutive month to 3.4%, and for wage growth to advance at a firm 0.4% MoM (5.3% YoY).''

Domestically, analysts at TD Securities expect the Bank of England's price stability mandate will force them to continue to hike even with a recessionary path forecasted by the BoE for 2023. This follows the recent double-digit UK Consumer Price Index print that confirmed the rates market's bias, supporting cable even in the face of a dollar in demand. 

Looking ahead, the analysts at TD Securities expect the Monetary Policy Committe to hike by 50bps at both its September and November meetings, and by 25bps in December, before an 8-month pause. ''From August 2023, we expect a series of cuts, returning Bank Rate to its neutral rate of around 1.75% in 2024.''

GBP/USD technical analysis

Cable is in a forceful downtrend, as per the weekly chart above, and there is plenty of momentum. That being said, in due course, the M-formation will be a pull to the upside, perhaps as a nearterm temporary pause in the trend. 

The daily outlook is pointing to a move lower, as per the 38.2% ratio aligning with prior lows. This appears to be bearish for the near term sessions.