**GBP/USD Weekly Outlook**
*Original analysis credit: ActionForex.com (www.actionforex.com)*
## Overview
The GBP/USD pair underwent significant movements during the past week, drawing the market’s attention as investors navigated through fluctuating risk sentiment and key economic data from both the UK and the US. The pair’s evolving trend mirrors the broader direction of central policy expectations and incoming economic signals. As traders prepare for the week ahead, it is crucial to assess recent price action, underlying technical structures, and fundamental factors likely to impact GBP/USD performance in the short and medium term.
## Recent Performance and Price Development
GBP/USD experienced choppy trading behaviors over the week, with bulls and bears battling for directional control against a backdrop of shifting narratives regarding both Bank of England (BoE) and Federal Reserve policies. While midweek saw renewed USD strength, GBP managed to regain some ground toward the week’s close, reflecting ongoing uncertainty about the pace and timing of rate moves in both economies.
Key highlights from the last week’s price action include:
– GBP/USD traded lower during periods of US dollar resilience, particularly as US data surprised to the upside or risk aversion intensified.
– Cable showed resilience at certain technical levels, recovering in response to easing US yields and a slightly more dovish tone from Federal Reserve officials.
– Price action frequently stalled around significant moving averages, while intraday volatility increased during major data releases.
## Technical Analysis
From a technical standpoint, GBP/USD’s weekly chart presents a mixed picture. The pair is currently in a corrective downtrend within a broader long-term range, testing key support and resistance levels that will shape the next move.
### Key Technical Factors:
– **Support levels**: Initial support for GBP/USD rests near 1.2633 (mid-June lows), aligning with a horizontal base observed over recent weeks. Below there, further downside could expose the 1.2599 area, with extended weakness targeting the psychologically important 1.2500 mark.
– **Resistance zones**: To the upside, GBP/USD faces immediate resistance at 1.2774, marked by June’s swing highs. Beyond that, the next key resistance lies at 1.2859, a level capped during both April and late May pullbacks.
– **Moving averages**: The 55-day EMA is acting as dynamic resistance, while the 100-day EMA provides a pivotal level for medium-term bias. Sustained movement above these averages may signal the start of a more impulsive bullish run.
– **Momentum indicators**: The RSI remains neutral to slightly bearish, indicating a lack of strong momentum in either direction. However, a sustained break below the 50 level could reinforce deeper corrective expectations.
– **Weekly candlestick structure**: Last week’s candle produced a lower wick, suggesting buying interest on dips but lacking a clear bullish reversal formation.
## Fundamental Drivers
The underlying narrative for GBP/USD continues to be anchored by diverging monetary policy prospects and evolving economic performance in both the UK and the US.
### US Dollar Side:
– **Federal Reserve Outlook**: With US inflation readings showing mixed trends, Fed officials maintained cautious communication, keeping rate cuts off the table for now. Sticky core inflation and resilient economic activity, particularly in the labor market, supported the US dollar during risk-off episodes.
– **Economic data releases**: US employment, retail sales, and ISM PMI reports provided a nuanced assessment, with positive surprises bolstering the dollar, while misses or softer prints offered GBP/USD brief respite.
– **Yield curve dynamics**: Oscillating US Treasury yields, especially at the short end, contributed to broader dollar volatility. Market positioning continues to shift according to nervousness surrounding the timing of eventual Fed rate cuts.
### Sterling Side:
– **Bank of England Policy**: The BoE remains cautious, with most policymakers signaling a data-dependent approach. Wage inflation and core CPI readings have underpinned a generally hawkish tone, reducing the immed
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