GBP/USD turns south towards 1.1600 as dollar rebounds ahead of US ADP

• GBP/USD comes under fresh selling pressure as the USD firms up.
• UK energy crisis, soaring Fed big rate hike bets dent risk appetite.
• Cable bears remain on track to test the wedge support at 1.1570.

GBP/USD is trading on the back foot in the European session, undermined by an impressive rebound staged by the US dollar across its major rivals.

The renewed dollar strength comes on the back of a fresh round of risk-aversion, as investors continue to reprice aggressive ECB and Fed rate hike expectations, which raise concerns over higher borrowing costs at a time when the global economies are at risk of recession.

Additionally, the worsening energy crisis in the euro area and the UK, falling British business confidence and raging inflation exert downward pressure on the pound, in turn, dragging GBP/USD lower.

All eyes now turn towards the US ADP private sector employment data, which could bolster the dollar rally on an upside surprise in the job additions.

From a short-term technical perspective, GBP/USD remains on track to test the falling wedge support at 1.1570, below a sustained break of the 1.1600 round level.

The 14-day Relative Strength Index (RSI) is probing the oversold territory, suggesting that there is still room for additional declines.

GBP/USD: Daily chart

On the flip side, bulls need to crack the 1.1700 barrier to initiating any recovery momentum towards the 1.1750 psychological mark.

Further up, a fresh advance towards the wedge resistance at 1.1791 cannot be ruled out.

GBP/USD: Additional levels to consider