The GBP to USD rate has been stuck between MAs, fluctuating in a $2 range, roughly from 1.26 to 1.28. But last week GBP/USD made a break to the upside, pushing above the resistance and opening the door for 1.30 as the USD turned weaker on softer Powell comments.

The US Dollar turned bearish in the last two months of 2023 as the FED started commenting on rate cuts, which sent GBP/USD higher from 1.20 lows. But, the bullish rally stalled at the 200 SM A(purple) on the weekly chart, which rejected the price and this pair retreated lower. However, the selling pressure has been pretty weak, with markets expecting the FED to start cutting interest rates before the Bank of England.

The retreat has been very slow, so the price action was indicating that buyers would get the upper hand again, as the UK economy also starts to come out of the slump where it fell, with services and manufacturing above contraction now. At the bottom, the 20 SMA (gray) turned into support and held the price during the pullback. This forex pair formed a few doji and hammer candlesticks down there, which are bullish reversing signals after the fall and the reversal started.

GBP/USD Weekly Chart – The 200 SMA Has been Broken

Last week we saw some strong bullish momentum for the British pound, with the US dollar turning weaker after the mixed employment and NFP payrolls figures. That sent GBP/USD around 250 pips higher as the price approached 1.29, breaking and closing above the 200 weekly SMA as well. So, now there’s little resistance on the way to 1.30 and we will try to buy the dips on smaller timeframe chart on this pair.

This week is expected to see significant trading cues emanating primarily from the UK and United States. The United Kingdom will release its monthly Gross Domestic Product (GDP) data on Wednesday, with employment figures set to be released the day before, providing additional insights into the economic health of the region. Besides that, we have the US CPI inflation figures and retail sales report as well. These releases are anticipated to have notable impacts on market sentiment and direction across various asset classes.

GBP/USD Live Chart