**GBP/USD: Pound Seeks to Reclaim 100-Day Moving Average — This Week’s Data Might Help**
*Adapted from an article by Nick Cawley, originally published on TradingView.*
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**Overview**
The British pound (GBP) has started the week with a cautious tone, clinging to support levels as it aims to break back above a key technical barometer: the 100-day moving average against the US dollar (USD). Market participants are closely watching critical economic releases from both the UK and the US, as they may dictate whether GBP/USD can regain bullish momentum or instead remain under pressure.
Throughout the early months of 2024, GBP/USD currency pair has witnessed bouts of volatility, reflecting shifting expectations for interest rate policy, economic performance in the UK and the US, and developments in global risk sentiment. Now, with several high-frequency data points on the docket, the market’s focus has intensified.
**Technical Analysis: The Importance of the 100-Day Moving Average**
The 100-day moving average (MA) is a widely-acknowledged technical indicator, often watched by both institutional and retail traders for trend confirmation and dynamic support or resistance. For GBP/USD, the 100-day MA has served as a battleground, with bulls and bears vying for control.
– **Current situation:** GBP/USD last traded just outside the 100-day moving average zone, after sliding below it during recent sessions.
– **Why it matters:** Reclaiming this level is viewed by many as the necessary first step to reestablish an upward trend from a technical perspective.
Key technical levels to watch:
– **Support:** Around the low of recent days, notably near 1.2660-1.2680.
– **Resistance:** First, the 100-day MA at approximately 1.2715-1.2720, then additional hurdles near 1.2800.
Momentum indicators such as the Relative Strength Index (RSI) have edged back into neutral territory, suggesting neither overbought nor oversold conditions. This technical stance sets the stage for this week’s data to tip the scales.
**Fundamental Backdrop: Central Bank Divergence in Focus**
At the heart of GBP/USD’s movement lies the monetary policy divergence between the Bank of England (BoE) and the US Federal Reserve (Fed). Traders are continuously recalibrating their expectations for when each central bank will begin easing policy.
– **Previous drivers:** In recent months, speculation that the Fed would be slower to cut than the BoE buoyed the dollar while weighing on the pound.
– **Shift in tone:** UK data have been mixed, keeping the BoE’s policy trajectory uncertain, while resilient US reports have fueled questions over the Fed’s rate cut timing.
**This Week’s Key Events and Data Releases**
As the pound attempts to retake the 100-day MA, several potentially market-moving data releases are in play. Here’s what traders are watching:
**1. UK Economic Data**
– **Unemployment Rate & Wage Growth:** Signs of loosening in the UK job market could encourage the BoE to consider rate cuts sooner, while strong wage growth might act as a barrier.
– **GDP Figures:** Any evidence of persistent stagnation, or worse, contraction, would be negative for the pound, while upside surprises help provide support.
– **Retail Sales & Inflation Data:** Consumer spending and inflationary pressures remain important, as sticky prices would keep the BoE on guard.
**2. US Economic Data**
– **Consumer Price Index (CPI):** As inflation remains a hot topic in the US, a strong print could reinforce expectations of a “higher for longer” Fed stance, supporting the dollar.
– **Retail Sales:** Shows the resilience of the American consumer. Robust numbers favor the greenback.
– **FOMC Speakers:** Any policy clues from Federal Reserve officials regarding the rate path may move GBP/USD, especially
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