**GBP/USD Forecast for July 25: Market Consolidation and Technical Analysis**
*Credits: Original article by Christopher Lewis, Menafn.com*
The GBP/USD currency pair has experienced a noticeable phase of consolidation, oscillating around major psychological levels as traders digest a complex mix of economic data and evolving central bank expectations. This article assesses the ongoing consolidation in the GBP/USD pair, exploring both fundamental and technical contributors to recent price action, and what traders should be watching over the near term. All technical analysis and forecasts herein build on the key insights provided by Christopher Lewis, with added trader-focused deep dives for a comprehensive outlook.
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## 1. Key Fundamental Drivers Affecting GBP/USD
Understanding the current GBP/USD landscape requires a close look at several underlying macroeconomic and geopolitical factors influencing both the British pound and the US dollar, including:
### a. Diverging Central Bank Policies
– **Federal Reserve**: The Federal Reserve has remained data-dependent, showing openness to further rate hikes if necessary but displaying increasing caution as inflationary pressures ebb and concerns over economic slowdown build.
– **Bank of England (BoE)**: The BoE has followed a policy tightening path, although recent UK economic data are stirring debate about peak interest rates. Economic headwinds, persistent inflation, and an uncertain post-Brexit trade environment have complicated the policy landscape.
### b. Economic Data Releases
Both currencies have been sensitive to recent data:
– **UK Data**: Mixed signals, with strong employment numbers being offset by weaker retail sales and manufacturing PMIs.
– **US Data**: US GDP and inflation figures continue to drive dollar volatility, with market participants weighing robust labor market data against softening inflation.
### c. Risk Sentiment
– **Global Market Flows**: Risk aversion flows have supported the US dollar at times, particularly as concerns about global growth persist.
– **Political Uncertainty**: Domestic political stability in the UK remains a question mark, especially as Brexit ramifications, trade arrangements, and political leadership remain in focus.
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## 2. Technical Analysis: GBP/USD Chart Consolidation
The GBP/USD pair is currently consolidating within a tightly defined trading range, largely moving sideways as bulls and bears struggle for conviction near the 1.29 handle. This phase typically signals market indecision and often precedes significant directional moves.
### a. Support and Resistance Levels
– **Immediate Support**:
– The 1.2850 zone has consistently acted as a floor, with multiple tests holding price action above this area.
– Psychological round number support at 1.28 remains critical, likely attracting renewed buying interest if tested.
– **Immediate Resistance**:
– Minor resistance emerges at 1.2950, just below the psychological 1.30 barrier.
– Further upside would see the 1.3000 level acting as a magnet for bullish price action, contingent on further positive UK or negative US data surprises.
### b. Price Action and Candlestick Patterns
Recent daily candles have shown small bodies and long wicks, classic signs of hesitation:
– Bulls have repeatedly attempted to surge above 1.2950 but have lacked follow-through.
– Bearish pullbacks are being absorbed above 1.2850, demonstrating resilient underlying demand.
### c. Moving Averages and Momentum Indicators
– **50-day Exponential Moving Average (EMA)**: The pair is consolidating above the 50-day EMA, reflecting intermediate-term bullish bias—but not by a wide margin.
– **200-day EMA**: Long-term support rests below at the 1.2750 region.
– **Relative Strength Index (RSI)**: The RSI hovers near the midline, neither overbought nor oversold, confirming the lack of prevailing directional momentum.
– **MACD**: The Moving Average Convergence Divergence remains flat, further signaling a wait-and-see market mood.
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## 3. What is Driving the Consolidation Phase?
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