GBP/USD bounces off low to 1.3200 ahead of US ISM manufacturing PMI

The GBP/USD pair is attempting to recover from weaker-than-expected UK manufacturing PMI-led drop to 1.3160 region and is currently trading around 1.3200 handle ahead of US PMI release.

The pair's initial leg of weakness on Monday was led by a tepid recovery in greenback, as measured by the US Dollar index. Adding to this, disappointing UK manufacturing PMI print, at 48.2 vs. 49.1 expected, infused further selling pressure around the British Pound.

Weaker economic data has now fueled expectations of immediate monetary easing by BOE, when it announces its monetary policy decision later during this week on Thursday. 

The pair, however, has managed to recover from lower levels ahead of US ISM manufacturing PMI. Consensus estimates are expecting the index to come-in at 53.1 for July, marginally lower from a reading of 53.2 recorded in June. A disappointing data will add on to the last week's disappointing data (durable goods orders and GDP), further diminishing possibilities of a Fed rate-hike in 2016 and continue weighing on the US Dollar in the near-term.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The technical picture presents a slightly bearish tone, given that the price is pressuring its 20 SMA whilst the technical indicators have turned lower around their mid-lines, overall neutral as the pair has been trading in a well defined range for already three weeks."

"The immediate support comes at 1.3160, with a break below it signaling a downward continuation towards 1.3100/20. Above 1.3230 on the other hand, the pair can see a modest recovery, with selling interest waiting in the 1.3260/80 region."