**Pound Sterling Price News and Forecast: GBP/USD Draws Support from a Modest USD Pullback**
*Original article source: FXStreet. Author: Anil Panchal*
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The British pound’s performance against the US dollar has remained a major focal point within the forex community, especially in light of recent macroeconomic data, central bank commentary, and shifting risk sentiment. In early July 2024, the GBP/USD pair exhibited renewed resilience, drawing support as the US dollar experienced a modest pullback. Let’s delve into the underlying factors, technical perspectives, and broader implications impacting GBP/USD as it navigates this crucial juncture.
## Market Drivers for GBP/USD
The pound-dollar pair’s modest but notable recovery is the direct result of evolving market sentiment and a recalibration of expectations from both the Bank of England (BoE) and the US Federal Reserve (Fed). Several interconnected themes are shaping the currency outlook:
### 1. US Dollar Weakness After Recent Rally
– The DXY (US Dollar Index) retreated after a streak of gains, providing breathing room for other major currencies including the pound.
– Market participants are reassessing the likelihood and timing of the Fed’s next monetary policy move, especially given mixed economic signals from the United States.
### 2. Bank of England Policy Outlook
– The BoE maintained a cautious tone in its latest communication, hinting that interest rate reductions are possible later in the year but still aren’t imminent.
– Additionally, the UK’s mostly in-line inflation data and generally solid labor market readings have provided the pound with underlying support.
### 3. US Economic Data
– Recent data releases have tempered aggressive speculation about imminent Fed rate cuts.
– Nonfarm payrolls, wage growth, and consumer sentiment figures have painted a picture of a still-resilient, albeit moderating, US economy.
### 4. Geopolitical Risks and Market Sentiment
– Uncertainty stemming from the global political landscape, including US election speculation and tensions in major economic regions, has played into safe-haven demand for the dollar, though this effect has waned recently.
– Risk aversion ebbed, giving high beta currencies such as the pound room for near-term gains.
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## Analytical View: Technical and Fundamental Perspective
### Fundamental Analysis
– The balance between UK and US central bank policy expectations remains the key determinant for GBP/USD direction.
– The BoE’s reluctance to rush rate cuts, juxtaposed with speculation about Fed easing, could sustain GBP/USD demand in the near future.
– UK economic data, specifically inflation and wage growth, will be heavily scrutinized for further clues on the trajectory of rates.
– Political stability in the UK, following the resolution of its general election, has also helped reduce some of the currency’s risk premium.
### Technical Analysis
As GBP/USD finds support on a weaker dollar, key technical levels come into play:
#### Support Levels
– **1.2750**: Recent lows and a key psychological level; holding above here is critical for bulls.
– **1.2700**: Next major support, coincides with previous breakout levels and the lower range of recent consolidations.
#### Resistance Levels
– **1.2850**: A ceiling tested multiple times over recent sessions; a sustained move above could encourage further buying.
– **1.2900**: Round-figure resistance, also tying into late-June highs. A breach may signal renewed momentum towards the 1.3000 psychological barrier.
#### Trend Indicators
– The 50-period moving average has held as dynamic support, reinforcing the pair’s underlying uptrend bias.
– Momentum oscillators, such as the Relative Strength Index (RSI), are neutral to modestly positive, suggesting there is room for further upside if USD softness continues.
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## Key Economic Events Shaping the Outlook
A number of recurring and forthcoming events will shape near-term trends for GBP/USD. Traders should remain watchful for these
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