**GBP/USD Weekly Outlook**
*(Original article by ActionForex.com – Credit to ActionForex for the original analysis and insights.)*
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**Overview**
The GBP/USD currency pair experienced notable volatility throughout the recent trading week, reflecting broader shifts in market sentiment impacted by global risk flows, central bank communication, and economic data releases from both the United Kingdom and the United States. While sterling remains influenced by domestic macroeconomic developments, much of its immediate direction is tied to expectations surrounding the Federal Reserve and the Bank of England policy outlooks.
This article delves into the key technical and fundamental factors influencing GBP/USD, provides a detailed analysis of recent movements, and projects potential scenarios for the coming week.
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**Weekly Recap: Key Developments**
During the week, GBP/USD managed to recover from a soft start, with initial losses driven primarily by dollar strength and languishing UK sentiment indices. However, as the week progressed, mixed US data and a slight dovish tilt in Fed commentary allowed the sterling to regain some ground. Notably:
– The pair started around 1.2650 and briefly dipped near 1.2610 before rebounding above 1.2700.
– Dollar weakness later in the week, prompted by soft US PMI figures, contributed to the recovery.
– A generally risk-on sentiment in global equity markets helped to offset concerns from UK inflation prints.
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**UK Macro Backdrop**
– **Economic Data:** The latest UK inflation data, while still above the Bank of England’s target, came in slightly lower than expected. With headline CPI at 2.3% y/y and core at 3.5% y/y, pressure remains on the central bank, but no immediate hiking is anticipated.
– **Employment:** UK employment data portrayed a mixed picture with wage growth remaining sticky, which may complicate the BoE’s timing for potential rate cuts.
– **Growth:** GDP growth remains lackluster, suggesting the economy is fragile and sensitive to external shocks, particularly from the US economy and global risk sentiment.
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**US Macro Backdrop**
– **Data Releases:** The US posted softer-than-expected durable goods orders and disappointing S&P Global Manufacturing PMI data, which pressured the greenback.
– **Fed Commentary:** Several Federal Reserve officials commented that while inflation remains above the 2% target, further rate hikes are unlikely. The tone remains mildly dovish, with the majority of the FOMC still projecting rate cuts later in 2024, though timing is uncertain.
– **Yield Movements:** US Treasury yields tracked lower on declining inflation expectations, aiding the GBP/USD recovery.
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**Technical Analysis**
**Daily Chart Overview**
– **Trend:** The medium-term bias for GBP/USD remains neutral to bullish. The pair is consolidating within a broad range, unable to break decisively higher above resistance or lower through major support.
– **Resistance:** 1.2745 (near-term), followed by 1.2800. A breach above 1.2800 would expose 1.2892, last seen in early March.
– **Support:** 1.2600 (immediate), then 1.2517. Sustained trading below 1.2600 would put 1.2445 into focus as a deeper support area.
**Momentum Indicators**
– Relative Strength Index (RSI) is hovering just below the 60 mark, suggestive of minor bullish momentum but not yet in overbought territory.
– Moving averages (21-day EMA, 55-day EMA) are flattening, indicating consolidation but with a slight upward tilt.
**Weekly Chart Perspective**
– GBP/USD remains well supported by the rising trend line from the September 2022 low at 1.0352.
– Topside remains capped by the double-top formation at 1.3141 and 1.3143 (July and August 2023 highs).
– As long as support above 1.2500 holds, the upward
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