The Pound Sterling (GBP) is facing headwinds on Monday, trading slightly lower against the US Dollar (USD) ahead of a data-heavy week in the US.

Market Focus:

• US Data-Packed Week: The key economic releases from the US this week will significantly influence market sentiment and potentially impact the Pound Sterling.
• Focus on Today’s ISM Manufacturing PMI: Today’s highlight is the Institute for Supply Management (ISM) Manufacturing PMI data for May, expected to show a slight increase to 49.8 (but still in contraction territory below 50).
• Sub-Components to Watch: Investors will be closely monitoring sub-components of the PMI report, such as New Orders and Prices Paid, for insights into future inflation pressures.
• Later This Week: The US ISM Services PMI on Wednesday and Nonfarm Payrolls data on Friday are other key data points to watch.
• Quiet UK Calendar: The UK economic calendar lacks major events this week.

Technical Analysis:

• GBP/USD Pullback: The GBP/USD pair has retreated from its recent highs near 1.2750.
• Descending Triangle Pattern: The 4-hour chart suggests a Descending Triangle formation, indicating potential for a downside breakout.
• 50-Day EMA and RSI: The 50-day EMA at around 1.2720 and the RSI hovering near 50 suggest a neutral short-term trend.

The Pound Sterling’s near-term direction depends heavily on the upcoming US data releases. A stronger-than-expected PMI or positive surprises in the following data points could weaken the Pound Sterling if they bolster expectations for a later Fed rate cut. Conversely, weaker data might support the Pound if it increases bets on an earlier rate cut. The technical indicators currently point towards a neutral to slightly bearish outlook for the GBP/USD pair in the short term.