**GBP/USD Forecast (25/07): Market Consolidation and Chart Analysis**
*By Christopher Lewis, credit to MENAFN.com*
—
Over the past several trading sessions, the GBP/USD currency pair has been caught in a consolidation phase, with traders closely watching for catalysts that could prompt the next major move. This environment has prompted market participants to weigh shifting US economic data against evolving policy expectations from the Bank of England (BoE) and the Federal Reserve. In this detailed analysis, we explore the dynamics shaping GBP/USD, interpret recent chart patterns, and consider the potential directions the pair might take in the coming weeks.
—
### Market Overview: Fundamental Drivers
Several macroeconomic factors are currently at play, exerting influence over GBP/USD:
– **US Economic Data Trends:** Recent reports from the United States have painted a mixed picture. While certain indicators such as Non-Farm Payrolls and retail sales have shown resilience, others—like ISM manufacturing and consumer sentiment—reflect softer momentum. Disparities in data create uncertainty around Federal Reserve policy shifts, making US dollar moves uneven.
– **USD Interest Rate Expectations:** At the last meeting, the Federal Reserve left interest rates unchanged, emphasizing a data-dependent approach. This stance has left the market uncertain about the timeline for any rate cuts, which in turn impacts the US dollar’s broader appeal.
– **UK Economic Developments:** The Bank of England, facing persistent inflationary pressures, has remained cautious. Recent inflation prints and wage growth data suggest that while headline inflation is cooling, core components remain sticky. This has led to speculation about the BoE’s hesitancy to cut rates aggressively in the near term.
– **Geopolitical and Local Political Risks:** The UK is also navigating the economic aftershocks of the Brexit process and preparing for upcoming political events, which could affect the pound through shifts in fiscal policy or investor sentiment.
—
### Recent GBP/USD Performance
After reaching a local high above the 1.31 handle, GBP/USD has pulled back and is now oscillating in a relatively tight range. This move suggests that traders are indecisive, likely waiting for new data or central bank signals before taking bigger positions.
**Key Observations:**
– **Consistent Range Trading:** Price action over recent days has been bounded by support around 1.2850 and resistance close to 1.3150.
– **Volume Analysis:** Trading volumes have diminished somewhat, reinforcing the view of a consolidative market rather than a trending one.
– **Reaction to Economic Releases:** The pair has exhibited heightened, but short-lived volatility around the release of US CPI and UK labor market statistics, only to revert to its range.
—
### Technical Analysis: Charting the Path Forward
From a technical standpoint, GBP/USD presents several clues about what might be next:
#### Support and Resistance Levels
– **Immediate Support:** 1.2850, where buying interest has consistently emerged.
– **Auxiliary Support:** 1.2750, a psychologically significant area and prior breakout level.
– **Interim Resistance:** 1.3020-1.3050, marked by previous highs and the upper Bollinger Band.
– **Major Resistance:** 1.3150, near the recent peak.
#### Chart Indicators and Patterns
– **Moving Averages:** The 50-day simple moving average (SMA) is trending above the 200-day SMA, signalling a generally bullish longer-term outlook, though the curve is flattening.
– **Relative Strength Index (RSI):** Sitting near the neutral 50 mark, the RSI implies neither overbought nor oversold conditions, consistent with a consolidating market.
– **Bollinger Bands:** Price is currently meandering near the middle band, underscoring reduced directional conviction.
– **MACD:** The Moving Average Convergence Divergence indicator does not show a clear crossover, further supporting the sidelined sentiment.
#### Price Action and Candle Patterns
– **
Read more on GBP/USD trading.