**GBP/USD Weekly Outlook: Sterling Struggles Amid Persistent Dollar Strength**
*Adapted and summarized from ActionForex.com, originally authored by ActionForex Analysts*
**Introduction**
The British pound (GBP) faced a challenging week against the US dollar (USD), as GBP/USD largely held below critical resistance levels despite resilience in the UK economy and a moderate decline in US inflation data. The currency pair continues to be weighed down by diverging policy expectations from the Bank of England (BoE) and the Federal Reserve (Fed). This week’s technical developments and fundamental drivers provide key insights into what could be expected for GBP/USD in the weeks ahead.
**Weekly Recap: GBP/USD Struggles to Gain Momentum**
GBP/USD attempted to extend its rebound in the past week, but sellers capped upside momentum. Refusal to push through key short-term resistance points means the pound ends the week on a less optimistic note. Macro factors continue to map a course of uncertainty, with monetary policy, risk sentiment, and economic data all playing pivotal roles.
**Major Developments Driving GBP/USD**
Several important themes underpinned GBP/USD moves in the latest week:
– **Dollar Regains Footing:** Despite softer US Consumer Price Index (CPI) figures, the dollar’s ongoing strength persisted, reflecting safe-haven flows and higher-for-longer expectations for US rates.
– **BoE-Fed Policy Divergence:** Markets increasingly sense the BoE may tilt towards a rate cut before the Fed, given softer UK data and growing political uncertainty. The Fed continues to project a data-dependent but ultimately patient stance on easing.
– **Economic Data Mix:** US inflation cooled slightly, but still above the Fed’s comfort zone. UK released stronger labor data, but growth concerns remain.
– **Geopolitical and Election Tensions:** Rising political risk, including the UK general election, supplies additional uncertainty and potential for currency volatility.
**Technical Analysis: GBP/USD Short-Term and Long-Term Trends**
GBP/USD remains within a corrective structure after failing to maintain upside push.
**Key technical observations include:**
– **Range-Bound Trading:** The pair fluctuated largely between 1.2600 and 1.2800, with neither bulls nor bears able to establish control.
– **Resistance Capping Advances:** Upside was capped just shy of the 1.2860 level, which corresponds to previous swing highs during late spring.
– **Support Holding for Now:** On the downside, the 1.2600 and 1.2650 zones have provided strong support, but repeated tests heighten risk of a break lower.
**Daily Chart View:**
– Price action shows a mild uptrend from the April low but remains below the important 1.2860-1.2900 resistance.
– Moving averages are flattening, suggesting lack of a clear trend.
**Weekly Chart View:**
– A broader sideways bias prevails for GBP/USD, confined within last year’s established range from roughly 1.2300 to 1.3140.
– RSI readings are neutral, reflecting limited directional conviction.
**Key Levels to Watch**
– **Resistance:** 1.2770, 1.2800, then the critical 1.2860 area. A close above 1.2860 would be needed for meaningful bullish momentum and a possible retest of 1.3000.
– **Support:** 1.2600-1.2650 zone remains pivotal. A decisive break below could expose 1.2500 and 1.2440.
**Fundamental Drivers: How Monetary Policy and Data Impact Outlook**
**US Federal Reserve: Hawkish Data-Dependence**
– The Fed recently held rates steady, reiterating its focus on inflation data. Despite encouraging CPI figures, core inflation remains above the Fed’s 2 percent target.
– Market participants are now expecting just one rate cut in 2024, with probabilities for a September move decreasing after robust
Read more on GBP/USD trading.