**GBP/USD Weekly Outlook**
*Based on the analysis by ActionForex.com*
**Overview**
The pound sterling, paired against the US dollar (GBP/USD), demonstrated notable volatility over the past week. The pair’s price action was largely influenced by key economic data releases and shifting monetary policy expectations. Amid ongoing uncertainty over the US Federal Reserve’s trajectory and the Bank of England’s stance, traders closely monitored developments driving the GBP/USD exchange rate.
In this weekly technical outlook, we assess the major trends and levels that traders need to monitor. We will analyze the fundamental factors that shaped market sentiment, dissect the critical technical support and resistance levels, and consider what may lie ahead for the GBP/USD pair. This article leverages insights from ActionForex.com’s technical team to present a comprehensive update for forex participants.
**GBP/USD Price Action: Recap**
GBP/USD experienced a corrective pullback after an earlier rally, struggling to sustain momentum above the 1.2800 handle. While optimism surged briefly around upbeat UK inflation data, the rebound met resistance as US Federal Reserve officials reaffirmed their data-dependent approach and signaled limited scope for policy easing.
– The pair hit a weekly high near 1.2850 before retracing lower.
– Bears managed to push the price towards the 1.2650 zone, tightening the trading range.
– Choppy price action reflected the market’s mixed sentiment around both the US and UK economic outlooks.
**Key Drivers and Market Themes**
Several fundamental factors played important roles in shaping GBP/USD’s movements.
1. **Bank of England Policy and UK Data**
– UK inflation data showed a modest cooling, supporting the Bank of England’s cautiously hawkish tone.
– A resilient labor market and persistent wage growth limited expectations of aggressive BoE rate cuts in the near term.
– Markets priced in two rate cuts from the BoE for 2024, but the timeline remains uncertain due to sticky core inflation.
2. **Federal Reserve Communications**
– US inflation data signaled gradual progress but did not guarantee swift policy easing from the Fed.
– Fed officials maintained a cautious stance, emphasizing the need for more definitive evidence of price stability.
– The US dollar found renewed strength around wagers that the first Fed rate cut could be delayed beyond September.
3. **Global Risk Sentiment**
– Mixed risk appetite across global markets added to volatility for GBP/USD.
– Geopolitical tensions and uneven equity markets pushed investors toward comparatively safer currencies at times.
**Technical Analysis**
The week’s price action set the stage for a pivotal battle between bulls and bears at multi-month resistance and support levels. The overall bullish setup on higher timeframes—buoyed by the prior recovery from 1.2300—remains intact, but short-term weakness has crept in.
**Weekly Chart Highlights**
– The pair formed a potential double-top pattern around 1.2850, hinting at waning upward momentum.
– Despite retreating from highs, GBP/USD held above the 1.2630 support zone, an area watched closely by buyers and sellers alike.
– The medium-term bias remains neutral-to-bullish as long as the pair is above the 1.2590 to 1.2630 support area.
**Daily Chart Dynamics**
– The daily moving averages (21-day and 55-day) converged near the 1.2700 to 1.2750 region, marking an area of congestion.
– RSI indicators are neutral but have pulled back from overbought levels, suggesting room for consolidation or further downside before an attempted rebound.
– Price action remains range-bound, with a key inflection at 1.2620/1.2650 and resistance layered from 1.2750 up to 1.2850.
**Critical Levels to Watch**
– **Immediate Support:** 1.2630 (recent swing low), followed by 1.2590 (prior breakout level). A
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