GBPUSD gained a modest amount last week as the Pound Sterling remained strong against its rivals despite the hawkish Bank of England (BoE). However, the pair remains on the back foot to begin the new week as investors avoid establishing significant holdings before of key data releases and events.
Markets began to price in a higher terminal BoE rate after data from the UK revealed last week that wage inflation remained strong and core consumer inflation remained sticky in early July.
Commenting on UK inflation data and how they might affect the Bank of England’s monetary policy, “The Bank of England will raise key interest rates twice more before the end of the year.” It may have to take additional measures in 2024, according to Commerzbank analysts.
“If, in the coming weeks, the market gets the impression that the BoE may, after all, be hesitant to fight inflation risks in order not to dampen the economy too much,” they added.
GBPUSD Technical Outlook
GBPUSD closed the last two 4-hour candles below the 20- and 50-period Simple Moving Averages (SMA), respectively, while the Relative Strength Index (RSI) indicator fell below 50, indicating a lack of buyer interest.
On the downside, 1.2700 (psychological level, static level) is the next support, followed by 1.2650 (static level) and 1.2615 (August 15 low).
If the GBPUSD crosses above the It could build bullish momentum and target 1.2800 (psychological level, static level) and 1.2830 (200-period SMA, Fibonacci 38.2% retracement) at the 1.2750-1.2760 resistance range, which contains the 100-period SMA and the Fibonacci 23.6% retracement of the latest downturn.
