**GBP/USD Weekly Outlook**
*Credit: Action Forex (Original Analysis)*
The British pound (GBP) experienced a significant shift against the US dollar (USD) over the past week as the currency pair GBP/USD reversed from recent highs, entering a phase of sustained consolidation. Market participants focused on critical macroeconomic data releases from both the United States and the United Kingdom, paying particular attention to clues about the timing of policy moves from the Bank of England (BoE) and the Federal Reserve (Fed). This article provides an in-depth analysis of GBP/USD, reviewing its price action, exploring fundamental drivers, and outlining potential scenarios for the weeks ahead.
### Overview
GBP/USD started the week on relatively firm footing near the 1.2770 area, only to struggle to maintain upward momentum as market sentiment shifted. Midweek, the pair dropped below the psychological 1.2700 handle, a region that had previously acted as both resistance and support during recent trading sessions. Traders’ attention remained fixated on evolving central bank narratives and incoming economic data, as both play an increasingly influential role in guiding foreign exchange market flows.
### Technical Analysis
**Price Trends & Chart Structure**
– GBP/USD’s rally from the May low at 1.2298 appears to have exhausted itself, with the pair retracing from a near-term peak at 1.2859 (mid-June high).
– Technical indicators now show the development of a corrective pattern, as the pair forms lower highs and lower lows on the four-hour and daily charts.
– The 1.2650–1.2700 region serves as a pivotal support band. Below this, further declines could see the pair targeting the 1.2590 area, with even deeper support toward 1.2500.
**Moving Averages**
– The 20-day Exponential Moving Average (EMA) has started to flatten, highlighting possible indecision or the early formation of a sideways trend.
– The 50-day Simple Moving Average (SMA) currently rests near 1.2640, reinforcing it as a crucial short-term support.
– Longer-term averages such as the 200-day SMA, near 1.2580, offer additional areas where buyers could return.
**Oscillators and Momentum**
– Daily Relative Strength Index (RSI) has retreated from overbought territory and hovers near the neutral 50 mark, indicating that bullish momentum has cooled but is not yet negative.
– MACD (Moving Average Convergence Divergence) is gradually rolling over, with the histogram contracting and the signal lines converging, both of which could foreshadow more consolidation or mild downside risk in the near term.
**Support and Resistance Levels**
Key technical markers to watch include:
– Initial resistance at 1.2745, followed by last week’s top at 1.2859.
– Supports at 1.2650, then deeper at 1.2590 and finally 1.2500.
### Fundamental Perspective
**United States: Dollar Remains Buoyant**
The greenback has remained supported in recent weeks, driven by persistent US economic resilience. Last week’s data prints underscored continued strength in the US labor market and relatively robust consumer spending. With the Fed remaining cautious about its rate-cutting trajectory, the US dollar managed to regain footing against a basket of major currencies.
Key drivers for the USD include:
– **Labor Market Data:** While recent Non-Farm Payrolls (NFP) showed moderate job growth, the Unemployment Rate hovered just above multi-decade lows, providing the Fed with confidence to maintain its current policy stance.
– **Inflation Risks:** With core inflation measures still above the Fed’s 2% target, the central bank has reiterated its data-dependent approach, pushing back on aggressive rate-cut projections. Fewer anticipated rate cuts have reinforced the dollar.
– **Safe Haven Demand:** Persistent geopolitical risks and global macro uncertainties have increased safe-haven demand for the
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