**GBP/USD Weekly Outlook**
*Adapted from ActionForex.com, originally written by ActionForex Staff Analyst. For complete analysis and updates, please visit [ActionForex.com](https://www.actionforex.com/technical-outlook/gbpusd-outlook/604121-gbp-usd-weekly-outlook-417/). All rights reserved by the original author.*
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## Overview
The GBP/USD currency pair experienced notable movements in the past week, driven by a myriad of factors ranging from economic data releases to central bank commentary. While optimism in the UK economic outlook provided some relief, ongoing uncertainties regarding interest rate trajectories and global risk appetite continued to exert their influence. For traders and investors, understanding the interplay of these factors is critical to forming an informed outlook for the British pound against the US dollar.
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## Weekly Performance Recap
– **Initial Recovery:** GBP/USD started the week with a mild recovery, rallying from the previous lows but encountering resistance near the mid-1.2700s.
– **Volatility Triggers:** The pair’s movement was largely shaped by:
– US inflation reports.
– Statements from the Federal Reserve.
– Bank of England’s changing policy signals.
– Broader market risk sentiment.
– **Consolidation:** By the week’s close, GBP/USD settled within a fairly narrow trading band, hinting at indecision among market participants.
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## Key Drivers Behind GBP/USD Movement
### 1. US Dollar Dynamics
– **Inflation Report:** The latest US CPI data showed a slight cooling in headline inflation—from 3.4% to 3.3% year-over-year. Core inflation also ticked lower, fueling speculation about a dovish turn from the Fed.
– **Fed Stance:** Despite softer inflation, the Fed’s stance remained cautious. The dot plot suggested only a single rate cut for 2024, whereas markets had anticipated as many as two.
– **US Treasury Yields:** Longer-term yields remained resilient. This helped underpin the dollar, limiting GBP/USD upside moves.
### 2. UK Economic Backdrop
– **Data Pulse:** UK GDP rebounded more than expected in Q1 2024, suggesting the economy is emerging from stagnation. Retail sales and employment data were mixed, while services inflation stayed sticky.
– **Monetary Policy Outlook:** The Bank of England struck a relatively balanced tone. Policymakers acknowledged progress in the inflation fight, but Governor Andrew Bailey suggested that rate cuts would be contingent on further sustained improvement.
– **Political Context:** The upcoming UK general election added a layer of uncertainty but had limited immediate impact on forex markets.
### 3. Global Risk Sentiment
– **Equity Market Trends:** Global equities remained near multi-month highs, maintaining risk-on sentiment and lending mild support to the pound as a risk-sensitive currency.
– **Geopolitical Events:** No major crises emerged, allowing markets to focus predominantly on economic releases and central bank rhetoric.
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## Technical Analysis
### Short-Term Chart Picture
– **Support Levels:**
– 1.2707 – Near-term horizontal support, tested several times during the week.
– 1.2590 – Key zone; breach here would indicate a reversal of the recent uptrend.
– **Resistance Levels:**
– 1.2756 – Immediate resistance corresponding to recent range highs.
– 1.2800 – Psychological barrier, with further resistance at 1.2828.
– 1.2892 – Major resistance; a decisive break opens the door to further bullish momentum.
– **Indicators:**
– Daily RSI remained in neutral territory, suggesting the pair is not overbought or oversold.
– GBP/USD traded above its 20-day moving average but below the 50-day average, indicating a range-trading bias.
### Trend Considerations
– **Bull Case:**
– A strong close above 1.2800
Read more on GBP/USD trading.