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Title: GBP/USD remains stuck between two key DMAs ahead of central banks’ bonanza


November 1, 2022 05:49 AM ET

By:AnalysisWatch

GBP/USD is consolidating the rebound above 1.1500 so far on Tuesday, kicking off November on the right foot. Investors are bracing for critical rate hike announcements from the Fed and Bank of England this week, as both central banks are expected to announce rate hikes of 75 basis points.


Ahead of the central bank bonanza, investors are breathing a sigh of relief thanks to currency market repositioning and a rally in Chinese equities. The risk-off market environment bodes well for the higher-yielding sterling, at the expense of the safe-haven US dollar.


The focus is on the US manufacturing PMI release, although no major reaction to the data release is expected unless the figure disappoints expectations by a wide margin. Meanwhile, the overall UK manufacturing PMI rose to 46.2 in October, up from 45.8 expected and 45.8 in September.


From a short-term technical standpoint, GBP/USD is waiting for a sustained break above the slightly bearish Daily Moving Average (DMA) at 1.1723.


The case for an upside breakout looks compelling, as the 14-day Relative Strength Index (RSI) remains firmly above the midline. The next boost could come from the Fed's or the Bank of England's policy decisions.


Until then, the pair is likely to maintain its consolidation mode between the 100DMA barrier and the upside, while the descending 50DMA at 1.1369 will continue to protect the downside.


Should the tide turn against the bulls, a break of the 50DMA support will expose the 21DMA bullish top at 1.1316.


Meanwhile, acceptance above the 100DMA will initiate a new uptrend towards the 1.1800 round level.

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