**GBP/USD Signal 23/07: Choppy in Previous Session Chart**
*By Hassan Maishera (Original Author, Menafn.com)*
**Overview**
The GBP/USD pair experienced significant volatility and lack of clear direction during the previous trading session. Traders observed choppy price action, characterized by alternating bullish and bearish moves, reflective of broader market uncertainty and mixed economic signals from both the UK and the US. Understanding the underlying factors that contributed to this indecision is crucial for anticipating future price movement and identifying potential trading opportunities.
In this comprehensive article, we will analyze the technical outlook of the GBP/USD currency pair, discuss the recent fundamental drivers shaping its price action, and outline key levels to watch. This analysis will include:
– Fundamental news affecting both the UK and US economies
– Key technical levels and chart patterns
– Potential trading scenarios for GBP/USD
– Risks to watch out for in upcoming sessions
**Fundamental Overview**
*United Kingdom Economic Outlook*
The British Pound has been affected recently by mixed economic data and shifting expectations regarding Bank of England (BoE) monetary policy. The UK economy has shown some resilience but is also facing headwinds, including subdued consumer activity, lingering inflationary pressures, and global uncertainty.
Key recent factors influencing the GBP include:
– Q2 2024 GDP readings that showed tepid economic growth, with concerns about stagnation persisting.
– A steady decline in inflation, leading market participants to speculate on the timing and likelihood of BoE rate cuts.
– Labour market data that remain tight but show initial signs of cooling, contributing to uncertainty over future wage growth and spending power.
– Political developments, particularly discussions post-election, which have led to cautious sentiment among investors.
The BoE has maintained a cautious tone, emphasizing data dependence before adjusting interest rates. Market participants are therefore closely monitoring data releases for any clues about policy pivots.
*United States Economic Outlook*
The US Dollar, likewise, has navigated a complex landscape of robust economic performance and evolving expectations for the US Federal Reserve’s interest rate policy. While the US economy continues to expand, the pace has somewhat moderated.
Recent drivers impacting the USD include:
– Mixed US inflation data, with headline CPI readings softening but core inflation remaining sticky.
– Federal Reserve officials’ communications, which have alternated between hawkish and dovish tones, further muddying USD direction.
– Ongoing resilience in the US labor market, with Non-Farm Payrolls exceeding expectations, but with some cracks appearing in jobless claims data.
– Global risk sentiment, as the USD remains a safe-haven currency in times of uncertainty and market volatility.
Together, these factors have led to a “tug of war” in the GBP/USD pair. Both currencies are subject to data-driven speculation regarding respective central bank policies, and this interplay has contributed to the recent choppiness in the pair’s chart.
**Technical Analysis**
*Daily Chart Overview*
The GBP/USD pair’s daily chart presents a picture of volatility without sustained directional momentum. The session saw the pair oscillate between resistance and support levels, suggesting both bulls and bears are struggling for control.
Key features of the recent price action include:
– Repeated testing of key resistance around 1.2900, but failure to break and hold above this level.
– Dynamic support emerging near 1.2820 to 1.2840, holding up despite several attempts to push lower.
– A series of lower highs and higher lows, indicative of indecision and the possibility of a range-bound phase.
*Technical Indicators and Signals*
– **Relative Strength Index (RSI):** The daily RSI fluctuates around the midline (50), confirming the absence of a decisive trend.
– **Moving Averages:** The short-term 20-period simple moving average (SMA) is converging with the 50-period SMA, signaling consolidation.
– **MACD Indicator:** The Moving Average Convergence Divergence histogram is flat, with signal and MAC
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