**GBP/USD Weekly Outlook – Analysis From Action Forex**
*Credit: Original analysis from Action Forex.*
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**Summary**
The GBP/USD pair exhibited a notable recovery last week, testing critical resistance levels amid evolving monetary policy outlooks and shifting market sentiment. The outlook for the coming week hinges on sustained bullish momentum, considerations of central bank policies, and evolving technical factors that could define the pair’s trajectory.
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**Weekly Performance Recap**
– **GBP/USD started the week with cautious optimism**, gradually gaining ground after consolidating above the 1.2650 support zone.
– The pair found renewed strength towards the midweek, buoyed by dovish signals from the Federal Reserve and slightly improved sentiment towards the pound.
– **Key technical resistance at the 1.2850-1.2900 region** came under pressure as bullish momentum accelerated.
– The weekly close remained robust, solidifying a short-term base and suggesting follow-through potential into the coming sessions.
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**Technical Analysis**
*Short-Term View (Daily and 4H Charts)*
– **Support Levels:**
– Primary support stands at 1.2730, the previous week’s swing low and a psychological mark for recent buyers.
– Further support is located at 1.2670, aligning with 55-day EMA and previous breakout levels.
– **Resistance Levels:**
– Immediate resistance is at 1.2860, a barrier the pair repeatedly tested last week.
– A daily close above 1.2860 would expose the next major resistance at 1.3000, a round number and multi-month high.
– **Momentum Indicators:**
– The Relative Strength Index (RSI) on the daily chart remains comfortably above the 50 threshold, not yet overbought.
– MACD is showing positive momentum, suggesting bulls are still in control in the near-term.
– **Moving Averages:**
– GBP/USD is firmly trading above both the 20-day and 55-day EMAs, a short-term bullish configuration.
– The 200-day SMA at 1.2600 acts as a major trend-defining support.
*Long-Term View (Weekly Chart)*
– The weekly structure highlights a broad upward channel that began in late 2023, with higher highs and higher lows remaining intact.
– Sustained closes above 1.2800 strengthen the argument for an extension towards the 1.3000 resistance zone.
– A failure to hold above 1.2730 on a weekly closing basis would warn of a broader pullback, undermining the current bullish bias.
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**Fundamental Overview**
*Bank of England (BoE) Policy and UK Data*
– The BoE has maintained a cautious hawkish tilt, highlighting concerns about entrenched inflationary pressures even as headline CPI trends lower.
– Recent UK economic prints have stabilized, with services PMI rebounding and labor market slack appearing, albeit slowly.
– Market participants expect the BoE to delay rate cuts relative to the Federal Reserve, lending relative support to GBP compared to USD.
– Upcoming wage growth and inflation readings this week could reinforce or challenge this narrative.
*Federal Reserve Policy and US Dollar Dynamics*
– The Federal Reserve struck a more dovish-than-expected tone at its June meeting, signaling three rate cuts remain on the table for 2024, contingent on data.
– US headline CPI fell more than expected last month, pushing market expectations towards a September rate cut.
– Yield spreads between US and UK government bonds have narrowed, favoring the pound.
– US growth data and labor statistics this week will be crucial for next steps in dollar direction.
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**Market Sentiment and Positioning**
– The latest CFTC positioning data shows speculative accounts have added to GBP long positions, betting on more BoE hawkishness versus Fed dovishness.
– Options markets indicate increased calls on GBP/USD, reflecting bullish sentiment in the near term.
– However, the pair
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