**GBP/USD Tumbles Ahead of Busy Data Schedule**
*By FXStreet Team*
The British pound encountered significant downward momentum against the US dollar in early June, with the GBP/USD pair declining notably in anticipation of a packed economic calendar for both the United Kingdom and the United States. Market participants remain vigilant as traders brace for a barrage of crucial economic reports that could set the tone for the currency pair’s next directional move.
**Backdrop: Recent Performance and Market Sentiment**
– The GBP/USD currency pair started the week struggling to maintain the psychological 1.2800 level.
– The pair’s decline was exacerbated by cautious sentiment in global financial markets, with investors showing a preference for the safe-haven US dollar amid concerns about global economic prospects and monetary policy uncertainty.
– Sterling’s underperformance was also attributed to tepid risk appetite, as well as to domestic factors, including the prospect of disappointing UK economic data and ambiguous policy signals from the Bank of England.
**Shifting Expectations Around Central Banks**
Both the Bank of England and the US Federal Reserve loom large over the near-term outlook for the GBP/USD pair. Recent market moves have been driven by shifting expectations around the timing and magnitude of interest rate adjustments from these key central banks.
– The US Federal Reserve has maintained a hawkish tone, with officials emphasizing the need for greater progress on inflation before considering rate cuts. This stance has lent support to the greenback, as resilient economic data continues to keep rate cut expectations in check.
– Meanwhile, the Bank of England’s path forward is more clouded. Speculation persists regarding the timing of the central bank’s first rate cut, especially as inflation data remains mixed and growth momentum appears fragile. Divergence in monetary policy outlooks has increased GBP/USD volatility.
**Upcoming Data: A Packed Calendar Ahead**
Investors’ attention is sharply focused on the economic calendar, as a flurry of high-impact UK and US data releases are set to potentially steer the GBP/USD pair.
**Key UK Economic Releases This Week:**
– Services PMI: The services sector represents a major pillar of the UK economy. A disappointing reading may reinforce concerns over fragile growth.
– Final Manufacturing and Composite PMIs: Finalized figures will reveal if earlier preliminary data under- or overstated the pace of expansion or contraction.
– GDP: Perhaps the most pivotal metric, UK GDP figures will shed light on overall economic health and could play a crucial role in shaping Bank of England policy expectations.
– Industrial and Manufacturing Production: Any weakness here may corroborate fears of sluggish growth, further pressuring sterling.
– Trade Balance: The UK’s trade position remains a constant focus, especially post-Brexit.
**Key US Economic Releases This Week:**
– ISM Services PMI: As in the UK, the health of the US services sector will be under scrutiny. A robust print could further strengthen the dollar.
– Initial and Continuing Jobless Claims: The labor market has remained a source of strength for the US economy. Surprise shifts in jobless claims can sway Fed expectations.
– Nonfarm Payrolls (NFP): The headline event for the US. This report holds the potential to significantly influence the outlook for Fed rate cuts.
**Technical Analysis: Pound Under Pressure**
Looking at the charts, GBP/USD has clearly lost momentum, with recent price action underscoring selling pressure as the pair fell below key support levels. Technical indicators caution that further losses may be possible without a strong bullish catalyst.
– After failing to consolidate above 1.2800, the pair rapidly reversed course, breaking beneath short-term supports.
– Immediate support is seen at levels near 1.2670 and 1.2630, followed by the important 200-day moving average, which often acts as a magnet during periods of heightened volatility.
– On the upside, initial resistance comes into play at 1.2730, with the 1.2800 figure remaining a critical threshold for bulls.
– The Relative Strength Index (RSI
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