**GBP/USD Consolidates Around 1.3500, Looks to US Macro Data for Fresh Impetus**
*By Haresh Menghani, originally published on FXStreet*
The GBP/USD currency pair has been stabilizing around the 1.3500 mark, maintaining a consolidative tone as traders await crucial economic data releases from the United States for the next directional cue. Despite the volatility that often characterizes the currency markets, the pair has shown resilience, navigating through a labyrinth of influences ranging from Omicron variant concerns, Bank of England (BoE) policy signals, and the ongoing evolution of US dollar dynamics.
### Recent Performance and Technical Overview
– GBP/USD has traded sideways, with little momentum to break out of the 1.3480 to 1.3530 range over recent sessions.
– The currency has failed to capitalize significantly on its recovery from December lows, suggesting that neither bulls nor bears have taken decisive control ahead of pivotal US economic indicators.
– Technical indicators point towards a cautious market, with the 50-day moving average sitting just above current levels, posing a near-term hurdle if buyers attempt to push higher.
– Support levels are observed near 1.3460 and below that at 1.3430, while immediate resistance stays at 1.3530, with a further cap expected around the psychological 1.3600 level.
### Market Sentiment: Drivers Behind GBP/USD Moves
#### Omicron Variant and UK Economic Prospects
– The fast-spreading Omicron coronavirus variant has clouded the UK’s economic outlook, leading to volatility in the pound.
– Despite high infection rates, government-imposed restrictions in the UK have been less severe than some market participants anticipated, offering slight relief to sterling.
– PMI data and anecdotal evidence suggest that while economic activity was affected in December and early January, the overall impact on growth has been less severe than initially feared.
#### Bank of England (BoE) Outlook
– Recent hawkish sentiments from the BoE continue to underpin the pound. The central bank surprised markets in December with a rate hike, marking its first since the onset of the pandemic.
– Analysts and market participants widely anticipate further monetary tightening at upcoming meetings, as the BoE remains focused on combating high inflation.
– However, policymakers have also indicated a data-dependent approach, with caution stemming from uncertainties related to COVID-19’s ongoing economic impact.
#### US Dollar and Federal Reserve Policy
– The US dollar has exhibited strength on the back of hawkish signals from the Federal Reserve, with markets pricing in multiple rate hikes through 2022.
– A robust recovery in US labor market indicators and consistent inflationary pressures have reinforced the dollar’s position as the market expects an end to ultra-loose monetary policy.
– The ebb and flow of risk sentiment has led to sporadic safe-haven bids for the greenback, exerting intermittent pressure on GBP/USD.
### Focus on US Economic Data Releases
Traders are keenly awaiting a slew of high-impact macroeconomic releases from the United States that may set the tone for GBP/USD in the near term, including:
– **Nonfarm Payrolls:** Labor market data remains a key driver for Fed policy. Strong job creation figures are likely to bolster the dollar and strengthen expectations for a March rate hike.
– **CPI Inflation:** Inflation metrics are under intense scrutiny as the Fed weighs the timing and pace of policy tightening. Higher-than-expected inflation could accelerate USD gains.
– **Retail Sales:** Consumer spending data will offer insight into the health of the US recovery, especially as fiscal stimulus further fades.
– **University of Michigan Consumer Sentiment Survey:** This will give clues about consumer confidence and spending prospects, both key elements in evaluating growth prospects for the US economy.
### What Could Move GBP/USD in the Short Term?
#### Bullish Triggers
– Any upside surprise in UK economic indicators, including industrial production or retail sales, could reinforce the BoE’s tightening trajectory, lending support
Read more on GBP/USD trading.