- GBP/USD flirts with three-week-old support line after declining in the last five consecutive day.
- Broad US Dollar strength weighs on Cable price ahead of UK Retail Sales for June.
- Downbeat UK data, cautious markets weigh on Pound Sterling.
- GBP/USD buyers need validation from weekly resistance line; MACD signals hint at further downside.
GBP/USD licks its wounds around 1.2870 amid Friday’s sluggish start to the Asian session, after declining in the last five consecutive days to refresh a two-week low. In doing so, the Cable pair portrays the typical pre-data consolidation as the market awaits the UK Retail Sales for June.
US Dollar Index (DXY) cheered upbeat US data and a rebound in the yields to jump the most in two months and exerted downside pressure on the Pound Sterling price the previous day. That said, US Initial Jobless Claims dropped to 228K for the week ended on July 14, the lowest since May, versus 237K prior and 242K market forecasts but the Continuing Jobless Claims rose to 1.754M for the said period compared to market forecasts of reprinting 1.729M figures. Additionally, the Philadelphia Fed Manufacturing Survey gauge improved to -13.5 for July from -13.7 prior, versus -10 expected while Existing Home Sales slumped -3.3% MoM in June compared to 0.2% prior gain.
Earlier in the week, US Building Permits and Housing Stars also reported downbeat figures for June whereas the Retail Sales growth eased despite posting upbeat details of Retail Sales Control Group for June. Despite the recently upbeat US employment clues, the US statistics haven’t been impressive to support the Fed in announcing more rate hikes past July in the next week, which in turn can challenge the US Dollar bulls. The same, if backed by upbeat UK Retail Sales, expected 0.2% versus 0.3% prior, may help the GBP/USD to extend the latest corrective bounce.
It should be noted that the recently released downbeat UK GfK Consumer Confidence for July, -30.0 from -24.0, prod the GBP/USD rebound. Furthermore, chatters that the UK PM Rishi Sunak is up for holding general elections in November 2024 also challenge the Cable pair’s corrective bounce.
Additionally, the looming fears about the UK’s economic slowdown seem to keep the GBP/USD buyers hopeful ahead of the key British data contributing majorly to the Gross Domestic Product (GDP).
Technical analysis
Technically, the strongest bearish MACD signals in 12 days join the steady RSI (14) line to suggest further declines of the GBP/USD pair, especially when it reverses from the multi-month top marked in the last week.
However, a three-week-old ascending support line and the 21-SMA can challenge the Cable pair sellers around 1.2850-40.
Following that, a convergence of the 50-SMA and an upward-sloping trend line from March, close to 1.2660-55 at the latest, will be crucial to break for the Pound Sterling bears for conviction.
On the flip side, GBP/USD recovery remains elusive unless the quote remains below the one-week-old descending resistance line, near 1.2990 by the press time. Also important to watch will be the pair’s ability to cross the 1.3000, as well as the latest peak surrounding 1.3145.
In a case where the Cable pair remains firmer past 1.3145, also cross the 1.3150 round figure backed by upbeat UK Retail Sales data for June, the buyers can aim for a March 2022 high of near 1.3300.
GBP/USD: Daily chart
Trend: Limited downside expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD sits at yearly lows near 1.0550 ahead of EU GDP, US PPI data
EUR/USD is trading near 1.0550 in the European session on Thursday, sitting at the lowest level in a year. The Trump trades-driven relentless US Dollar buying and German political instability weigh on the pair. Traders await EU GDP data and US PPI report ahead of Fed Chair Powell's speech.
GBP/USD holds losses below 1.2700 on sustained US Dollar strength
GBP/USD is holding losses near multi-month lows below 1.2700 in European trading on Thursday. The pair remains vulnerable amid a broadly firmer US Dollar and softer risk tone even as BoE policymakers stick to a cautious stance on policy. Speeches from Powell and Bailey are eyed.
Gold price hits fresh two-month low as the post-election USD rally remains uninterrupted
Gold price drifts lower for the fifth consecutive day and drops to its lowest level since September 19, around the $2,554-2,553 region heading into the European session on Thursday. The commodity continues to be weighed down by an extension of the US Dollar's post-election rally to a fresh year-to-date.
XRP struggles near $0.7440, could still sustain rally after Robinhood listing
Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.