Tuesday's trading session produced a mixed fundamental structure for GBPUSD as investors closely watched the week's forthcoming pivotal events.

Europe's PMIs failed to provide a promising start in the early hours, reinforcing concerns that the region is either on the verge of or already in a recession.

BoE Could Leave Rates Unchanged

This circumstance may make the European Central Bank's task easier on Thursday, as there may be little justification for further tightening when the bloc is already experiencing economic stress. In the meantime, the PMI data for the United Kingdom did not deviate significantly from expectations and continued to indicate an economy under pressure and vulnerable to recession.

Despite the decreased unemployment rate to 4.2%, this data should be interpreted cautiously due to the modified methodology. In conjunction with other labor market indicators, it suggests a progressive easing of labor market pressures over the next few months. In turn, this may exert a downward pressure on wage growth, enabling the Bank of England to maintain current interest rates for the time being.

US Dollar Index (USDX) Outlook

The US Dollar Index (DXY) grabbed a buying pressure on Tuesday, raising the price towards the 106.30 level. The upward pressure came from US economic releases, which exceeded expectations.

The market sentiment has shifted to the upcoming Q3 GDP release on Thursday, besides the personal consumption expenditure (PCE). Currently, a minority of traders expect a change in the interest rate, but a solid clue might come from Chair Powell's speech on Wednesday.

GBPUSD Technical Outlook

In the daily chart of GBPUSD, the overall market momentum is bearish, where an ongoing pennant pattern suggests a strong bearish trend continuation.

Moreover, the dynamic 20-day EMA works as a strong resistance from where a bearish two-bar reversal came. Among other trading tools, the 14-day RSI is below the 50.00 line, while the MACD Histogram shows a downside pressure.

Based on this outlook, a bearish continuation is potent, whereas a conservative approach is to look for short opportunities below the 1.2090 static level. However, an immediate bullish range formation may come after having a D1 candle above the 20-day EMA.

*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.