GBP/USD Eyes Key Resistance at $1.3150 Amid UoM Sentiment Data & Inflation Expectations

As of Friday, September 13, the GBP/USD pair continues to show modest gains, trading at $1.31324, reflecting a 0.03% increase. Market participants are closely monitoring U.S. economic indicators and their impact on the U.S. Dollar. Recent data, including the Federal Budget Balance and Core PPI, offered mixed signals.

The Federal Budget Balance showed a significant deficit at -$380.1B, well above the anticipated -$285.7B. Meanwhile, Core PPI rose by 0.3%, surpassing expectations of 0.2%, contributing to a slightly firmer U.S. dollar. Unemployment claims also came in slightly higher than forecasted at 230K versus the expected 227K, adding to market uncertainty.

Key Insights:

• Pivot Point at $1.31509: A critical resistance level that could dictate future momentum for GBP/USD.
• RSI at 58: Suggests neutral to bullish momentum but no immediate overbought conditions.
• U.S. Consumer Sentiment & Inflation Expectations: These data releases are pivotal for determining market direction and could heavily influence GBP/USD trading.

Traders will be looking ahead to Friday’s release of U.S. Import Prices, forecasted to drop by 0.2%, and the University of Michigan’s Prelim Consumer Sentiment, expected at 68.3. These key economic indicators could play a decisive role in determining GBP/USD’s short-term direction, as they offer insight into inflationary pressures and overall market sentiment in the U.S.

*#GBPUSD Analysis* :- The Bank of England cut rates in August but has been taking a cautious approach to further rate cuts.

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— Trade xauusd with sara (@sarafx_11) September 13, 2024

Technical Outlook: Resistance at $1.3150 Crucial for GBP/USD

On the technical side, GBP/USD faces a significant challenge at the $1.31509 resistance level. A doji candle has formed under this level, signaling market indecision. Traders are watching this closely, as a break above could ignite a more sustained bullish momentum, while failure to surpass it could result in a retracement.

The Relative Strength Index (RSI) currently stands at 58, indicating neutral-to-bullish sentiment. The 50-day Exponential Moving Average (EMA) at $1.31043 is providing near-term support, reinforcing the slight upward bias seen during today’s session. However, the pair is trading below a downward trendline that extends from $1.3150, suggesting caution among traders as they await further data.

If the pair breaks above $1.31509, the next resistance levels to watch are $1.31844, $1.32297, and $1.32672. On the downside, immediate support is seen at $1.30869, with stronger support at $1.30384 and $1.30024. A break below these levels could signal a bearish shift for GBP/USD.

#YEN futures open gaped up.
yen pairs under pressure. #EURUSD #GBPUSD pic.twitter.com/jGCAdZun4s

— Traderhustle (th) (@gagitujugagitu) September 13, 2024

Upcoming Economic Events to Watch

Looking ahead, traders will focus on several key events, including the release of U.S. Prelim Consumer Sentiment and Inflation Expectations. The Consumer Sentiment Index is forecasted at 68.3, a slight increase from the previous reading of 67.9. Meanwhile, U.S. Inflation Expectations are expected to hold steady at 2.8%. These data points will offer critical insight into the U.S. consumer outlook and inflation trends, both of which could heavily influence the Fed’s upcoming monetary policy decisions.

Additionally, traders should pay attention to the UK’s Consumer Inflation Expectations report, scheduled for release at 8:30 AM GMT. Forecasted at 2.8%, this report could influence the Bank of England’s future rate hikes and impact GBP/USD trading dynamics.

Conclusion: GBP/USD at a Crossroads

In conclusion, GBP/USD is facing a critical resistance level at $1.31509. A break above this could signal further gains, while a failure to breach it may lead to a bearish retracement. U.S. economic data, particularly the University of Michigan’s Consumer Sentiment and Inflation Expectations reports, will likely play a pivotal role in shaping the pair’s near-term trajectory.