GBP/USD Hovers at 1.2700 Amid Strong US GDP; Potential Sell Trade
The GBP/USD pair is exhibiting a lack of strong directional momentum this Friday, fluctuating narrowly above the 1.2700 threshold during the Asian trading hours. The currency pair maintains proximity to the almost two-week apex achieved on Wednesday.
Investors are now poised for the release of the US Core PCE Price Index, which is expected to significantly shape market expectations regarding the Federal Reserve’s timeline for interest rate adjustments and consequently impact the US Dollar’s strength.
US Economic Performance and GBP Stability
Encouragingly robust US economic growth data and the suggestion of receding inflation have fostered hope for a gentle economic downturn, leading to a dip in US Treasury yields. This scenario places USD proponents in a cautious stance, providing a degree of support to the GBP/USD exchange rate.
In contrast, the UK’s resilient economic start bolsters the Bank of England’s position to maintain interest rates at their highest in almost 16 years in the forthcoming policy meeting, potentially bolstering the Pound.
However, the anticipations of delayed rate cuts by the Fed might restrain traders from placing robustly bearish USD wagers, potentially limiting the upside for the GBP/USD pair before the Federal Open Market Committee (FOMC) convenes next week.
Recent Data and Forthcoming Economic Indicators
The negative CBI Realized Sales figure of -50, released on Thursday, surpassed market expectations, indicating a contraction and influencing the Pound’s valuation. Meanwhile, the USD’s trajectory is also shaped by the recently released Advance GDP quarterly data showing a 3.3% increase, which fortifies the currency against the Pound.
What’s Next?
Looking ahead, the market’s focus is on the upcoming economic indicators, with the Core PCE Price Index, Personal Income, and Personal Spending data, followed by Pending Home Sales, all of which could provide fresh directional cues for the GBP/USD pair as they reflect on consumer behavior and inflationary pressures in the US economy.
GBP/USD Technical Outlook
The GBP/USD is demonstrating a phase of consolidation as it oscillates around the pivot point of 1.2711, highlighted by the green line. This level acts as a barometer for the currency pair’s immediate directional bias.
The sterling currently faces a trio of resistance challenges, marked by blue lines, with the first hurdle at 1.2774, followed by intermediate resistance at 1.2798 and a more formidable barrier at the ceiling of 1.2800. These levels are likely to test the pound’s resilience, potentially capping gains and sparking reversals.
Conversely, support levels, delineated by red lines, form a safety net below the pivot, with the primary support at 1.2694. Subsequent cushions lie at 1.2648 and 1.2610, respectively. These supports are crucial in preventing a steeper descent of the pair. With the Relative Strength Index (RSI) hovering at a neutral 48.72, the GBP/USD lacks clear momentum, suggesting a tug-of-war between buyers and sellers as market participants anticipate catalysts that could break the current equilibrium.
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