Anyone Else Looking to Buy the Retreat at the 20 SMA in GBP/USD?
The British Pound (GBP) has shown decent strength during the last several weeks, as the USD continues to display weakness. Last week, this forex pair picked up further momentum as it surged around 550 pips higher, on softer consumer and producer inflation figures from the US which sent the USD diving lower and GBP/USD surging higher.
Although, the price faced resistance around the 1.3150 level as the USD tumble stopped on Friday and it even experienced a slight rebound yesterday. The price retreated around 100 pips lower, where it met the 20 SM A(gray) on the H4 chart. Sellers pierced this moving average briefly, but buyers came back and pushed the price back up, closing the day around 1.3080 where the 20 stands.
The economic calendar is not as loaded this week as it was last week, but there are several data releases that could impact the performance of GBP/USD. One of them is the release of UK inflation report tomorrow, which is considered a medium-risk event for this pair.
There is anticipation for a potential drop in inflation, driven by energy prices, which could be offset by rising wages. The outcome of this data release will determine if UK inflation remains elevated or starts to subside. Governor Andrew Bailey and the Bank of England (BoE) have maintained their stance that inflation is expected to decline significantly in the third and fourth quarters of 2023. Traders are particularly interested in this data due to the recent increase in average earnings, including and excluding bonuses, although it is not a game changer since markets are more concentrated on the FED and the USD.
In terms of the US Dollar, attempts at recovery have been elusive as the Dollar Index (DXY) faces selling pressure. The US Federal Reserve has entered a “blackout period” ahead of the July 26 meeting, which means there may be limited comments or statements from FED officials. So the focus for the USD will shift to the Retail sales which are scheduled to be released later today and the US earnings reports later in the week. They might give the USD a push n either direction, leading up to the Federal Open Market Committee (FOMC) meeting. Although, the
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