The GBP/USD trimmed intraday gains on Tuesday after the UK PMI data, while the dollar managed to shrug off early weakness following solid domestic figures and a bounce in Treasury yields.
At the time of writing, the GBP/USD pair is trading at the 1.1480 area, posting a 0.20% daily gain after peaking at 1.1566 earlier in the session.
PMI data showed the U.K. manufacturing sector contracted for the fourth consecutive month as the index fell to a 29-month low of 46.2 in October, down from 48.4 in September but above the earlier estimate of 45.8.
Across the pond, U.S. manufacturing PMI recorded a slight expansion coming in at 50.2, beating the market consensus of 50 but decelerating its growth pace from its previous reading of 50.9. S&P Global reported weak demand conditions are dampening growth.
On Wednesday, the Federal Reserve will announce its monetary policy decision. Market participants have completely discounted the fourth consecutive 75 bps.
In addition, investors will eye the FOMC members’ economic projections, the dot plot, and any monetary policy forward guidance.
From a technical perspective, the GBP/USD pair maintains a short-term neutral outlook as indicators are turning flat on the daily chart while the price consolidates in a wide range between the 20- and the 100-day SMA. The RSI gained a slight positive slope above its midline, while the MACD prints lower green bars.
On the upside, the next critical resistance stands at the 1.1600 psychological mark. A break above could pave the way towards the 1.1625 area and the 100-day SMA, currently at 1.1710.
On the downside, immediate support could be found at the 1.1435 zone, followed by the 1.1400 area, and at the 20-day SMA currently at 1.1310.