GBP/USD trades within the descending regression channel coming from late September and the Relative Strength Index (RSI) indicator on the four-hour chart stays well below 50, reflecting the bearish bias.
On the downside, the lower limit of the descending channel and the 100-day Simple Moving Average (SMA) form a strong support area at 1.2950-1.2960 ahead of 1.2900 (round level, static level). Looking north, first resistance could be seen at 1.3050 (static level, upper limit of the descending channel) before 1.3090-1.3100 (Fibonacci 23.6% retracement of the latest downtrend, static level) and 1.3140 (50- day SMA).
Following a two-day recovery, GBP/USD turned south on Monday and lost 0.5% on the day. The pair struggles to gather recovery momentum early Tuesday and trades slightly below 1.3000.
Markets adopted a cautious stance at the beginning of the week amid escalating geopolitical tensions in the Middle East, allowing the US Dollar (USD) to benefit from safe-haven demand. At the time of press, US stock index futures were down between 0.4% and 0.6%.
A bearish opening in Wall Street, followed by an extended slide in major equity indexes could allow the USD to preserve its strength and force GBP/USD to stretch lower.
The US economic calendar will feature the Richmond Fed Manufacturing Index data for October, which is unlikely to trigger a noticeable market reaction.
In the early American session, Bank of England (BoE) Governor Andrew Bailey will deliver a keynote address at the Bloomberg Global Regulatory Forum in New York. Since he is unlikely to comment on the policy outlook, this event could have little to no effect on Pound Sterling's valuation. The next important data release for GBP/USD will be S&P Global's preliminary October Manufacturing and Services Purchasing Managers Index (PMI) data for the UK and the US on Thursday.
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