**GBP/USD Weekly Outlook (Credit: ActionForex.com)**
The GBP/USD pair finished another eventful week with significant market volatility, capturing traders’ attention as central bank policies and economic data releases continue to influence sentiment. In this week’s outlook, we delve into the technical and fundamental landscape affecting the currency pair, a review of the past week’s action, and projections for the road ahead.
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## Summary of Previous Week’s Action
GBP/USD started the week on the defensive, pressured by a combination of US dollar strength and lingering concerns about the UK’s economic outlook. The early sessions saw the pair drop sharply, partly reflecting safe-haven dollar demand as risk sentiment soured amid global growth concerns. Although a midweek bounce attempted to push GBP/USD higher, resistance around psychological and technical levels capped gains.
– **Opening Price:** GBP/USD opened the week around 1.2690
– **Lowest Point:** The pair dropped to a low of 1.2654 as the dollar rallied on upbeat US data and hawkish commentary from Fed officials.
– **Highest Point:** Attempted recoveries fizzled above 1.2760, unable to retest previous highs as UK economic data underwhelmed.
– **Weekly Close:** GBP/USD settled near 1.2700, virtually flat compared to the weekly open, having traded within a relatively narrow range but with notable intra-day swings.
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## Key Developments Influencing GBP/USD
### 1. **Central Bank Policy Divergence**
– **Federal Reserve Outlook:** Minutes from the latest FOMC meeting revealed most officials want to keep rates elevated for a longer period to ensure inflation progress is sustained, dampening hopes for near-term rate cuts. This continued to underpin dollar demand throughout the week.
– **Bank of England (BoE):** The recent BoE meeting minutes reflected a cautious stance, emphasizing the need for sustained evidence of falling inflation before any monetary easing. UK inflation remains stubbornly above the central bank’s 2% target, especially in the services sector.
### 2. **Economic Data Releases**
– **United States:**
– Durable goods orders printed stronger than expected, reinforcing the narrative of economic resilience.
– Weekly jobless claims remained moderate, supporting prospects for a still-healthy labor market.
– **United Kingdom:**
– UK retail sales and core inflation data were softer than forecast, suggesting that the consumer sector is under strain and raising questions about the sustainability of the UK’s economic recovery.
– Slower wage growth figures are seen as putting less upward pressure on inflation, but still above levels consistent with the BoE’s target.
### 3. **Geopolitical and Market Sentiment**
– Global markets reacted to ongoing concerns about economic growth, particularly in Europe and China, contributing to bouts of risk aversion and boosting flows into the US dollar.
– Escalating geopolitical risks, including Middle East tensions and global trade frictions, further supported the dollar’s safe-haven appeal.
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## GBP/USD Technical Outlook
The technical picture for GBP/USD shows the pair entangled between support and resistance, with near-term price action suggesting a consolidative bias.
### **Daily Chart Analysis**
– GBP/USD tested horizontal support near 1.2650 throughout the week, but held above this level, preserving hopes for a rebound.
– Resistance at 1.2760/80 area was tested but not convincingly breached, suggesting sellers remain active on rallies.
– The 50-day moving average (DMA) now sits around 1.2700, acting as a price magnet as the week draws to a close.
### **Key Technical Levels to Watch**
– **Support:**
– 1.2650: Recent week’s lows and horizontal support
– 1.2600: Psychological level, with additional support from recent swing lows
– 1.2500: Round number and multi-month support zone
– **Resistance:**
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