GBP/USD struggles to stay above 1.35 ahead of US data

Following a failed attempt to stay above the 1.35 handle, the GBP/USD pair trades in a tight range below that level as the trading action remains subdued in the aftermath of the FOMC meeting. As of writing, the pair was at 1.3490, down a couple of pips on the day.

After rising to its highest level since the Brexit referendum at 1.3630 on Wednesday on the back of stronger-than-expected retail sales data from the UK, the cable reversed course in the late NA session as the greenback gathered strength against its peers amid heightened expectations of another 25 basis points rate hike in December. The US Dollar Index pierced through the 92 mark and started to consolidate its gains. At the moment, the index was at 92.22, virtually unchanged on the day.

• Fed clearly signalled its bias toward hiking rates one more time this year - BBH

Despite this recent drop, the pair is trading in a tight 40-pip range on Thursday and is waiting for the next catalyst. The weekly jobless claims and Philly Fed Manufacturing Index will be released from the U.S. in the session. Although this data generally don't receive significant market reactions, investors could find an excuse to continue buying US dollars if the data come in positive.

Technical outlook

The RSI indicator on the daily graph continues to float above the 70 handle, suggesting that the pair is likely to stretch its correction drop. 1.3455 (Sep. 20 low) aligns as the first technical support ahead of 1.3380 (Sep. 15 low) and 1.3230 (20-DMA)). On the upside, near-term resistances could be encountered at 1.3500 (psychological level), 1.3615 (Sep. 15 high) and 1.3660 (Jun. 24/Brexit referendum closing level).

• GBP rebounds may be capped by recent highs – Westpac
• GBP/USD upside pressure mitigated below 1.3267 – Commerzbank