**GBP/USD Weekly Outlook**
_Source: Action Forex | Original Analysis by ActionForex.com_
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### Overview
GBP/USD experienced volatile price action over the past week, outlined by shifting sentiment in both UK and US economies. The currency pair hovered around the 1.27 handle, responding to key fundamental drivers such as economic data releases, central bank commentary, and broader market sentiment. The pair’s future trajectory remains closely linked to differential expectations on rate paths for the Bank of England (BoE) and the US Federal Reserve (Fed), alongside macroeconomic trends such as inflation, growth, and labor market signals.
This analysis will deconstruct the recent movements in GBP/USD, provide technical insights, and set out scenarios for the coming week.
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### Fundamental Context
#### Key Influences on GBP/USD
– **Bank of England (BoE):** The BoE has adopted a cautious stance on rate cuts amid sticky inflation, providing some support to sterling.
– **US Federal Reserve (Fed):** Mixed economic data in the US has kept market participants debating the timing and extent of Fed easing, creating choppy USD movement.
– **Economic Data:** Both UK and US economies posted significant data prints last week, influencing GBP/USD positioning.
– **Risk Sentiment:** Ongoing geopolitical concerns and equity market moves contributed to shifts in risk appetite, indirectly impacting currency levels.
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#### UK Economic Recap
– **GDP Figures:** The UK’s GDP readings exhibited modest growth, dampening recession fears but not fueling strong optimism.
– **Inflation:** Still running above the BoE’s 2% target, although recent figures suggest a slow cooling that reduces pressure on the central bank.
– **Labour Market:** Wage growth remained elevated; unemployment stayed low, bolstering sterling against downward momentum.
– **Consumer Confidence:** Consumer sentiment continued its slow recovery, but cost-of-living concerns still linger.
#### US Economic Recap
– **Inflation Data:** US CPI came in softer than expected, raising expectations for imminent Fed policy easing.
– **Labor Market:** Nonfarm payrolls were solid, but signs of softer wage growth and rising unemployment claims hinted at cooling momentum.
– **Retail Sales:** US retail sales data disappointed, highlighting cracks in consumer resilience.
– **FOMC Signals:** Recent Fed commentary emphasized data-dependence and patience, further muddling interest rate timing projections.
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#### Relative Rate Expectations
The divergence in interest rate expectations remains a decisive factor for GBP/USD:
– **BoE Policy:** While UK inflation is easing, the BoE signals hesitancy to move quickly on rate cuts, supporting the pound.
– **Fed Policy:** Softer US data and dovish forward guidance has markets pricing in earlier US cuts, weighing on the dollar.
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### Technical Analysis
#### Weekly Chart Overview
– **Trend Direction:** GBP/USD remains in a medium-term uptrend from the 2023 lows but faces congestion in the mid-1.27 zone.
– **Key Resistance:** The 1.2800–1.2850 zone acts as a ceiling, tested multiple times but not yet firmly breached.
– **Support Levels:** Initial support lies at 1.2670, with deeper backing below at 1.2590 and 1.2500.
#### Momentum Indicators
– **RSI:** Oscillating around neutral levels, currently neither overbought nor oversold, supporting the pair’s consolidation pattern.
– **MACD:** Signal lines remain positive, underpinning the pair’s bullish bias, but losing upside steam.
#### Moving Averages
– **50-Week SMA:** Acts as dynamic support near 1.2570.
– **200-Week SMA:** Provides longer-term grounding for price action around 1.2450.
#### Fibonacci Levels
– GBP/USD found repeated support at the 38.2% retracement of the Jan–Apr rally (~1.2670).
– The 61.8% retracement
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