GBPUSD Price Prediction: Pound recovers from oversold zone. Following a March sales affected by rain, UK retail sales recover.

GBPUSD pair Key Considerations

Sterling is maintaining gains from the Asian session at 1.2350 zone.

After a March Sales Figure Affected by Rain, UK Retail Sales Recover.

Oversold zone was entered by the RSI, confirming a greater retracement.

UK Spike in Inflation Figures

This week, the UK saw a spike in inflation, and despite the (the BoE) aggressive repricing of maximum rate, The probability failing to stop Pound’s decline as sustained US dollar strength persisted. The GBPUSD is presently trading at 1.2340 after an impressive recovery throughout the Asian session from lows at the 1.2300 mark. The issue if cable can maintain its improvements as the day rolls on lingers, just like the rest of the week.

The UK retail sales figures

This morning, the UK revealed statistics on retail sales underlying the month of April. Confirming ONS statements that the reason for March’s weak retail sales was due to the month’s downpours. The result for April came up at 0.5%, recovering from a decline of 1.2 percent in March and showing some evidence that UK traders may be a little more optimistic about the future. During the three months leading through April 2023, sales volumes increased by 0.8%; August 2021 saw the highest rate of growth, at 1.3 percent.

Source: Retail sales, Great Britain: April 2023, according to the ONS.

*NOTE: Tha bove depicts the parameters that went behind the general retail sales volumes – (Amount purchased) increasing by 0.5% month over monthly in April 2023.e diagram 

EVENT RISK AND US ASPECTS

So long as a solution on raising the US debt limit isn’t reached. The US currency, that has served as a major factor in the motion of the pound ought to keep steady. Although this has been significant talk about the merits of an agreement, the coming days will be crucial as the due date of June 1 draws near.

In the next day, attention will turn to the crucial Core PCE data from the US. Which continues to be the Fed’s favorite inflation indicator. This follows the previous day’s mainly encouraging US statistics. That showed that both new and continuing jobless claims exceeded expectations and that QoQ GDP growth estimates. As we approach the June conference, the labor front in the US has gained a further encouraging notch.

The US PCE Prediction

The US BEA, will issue the Core Personal Consumption Expenditure. The Fed’s selected inflation indicator, on Friday, May 26 at 12:30 GMT. As the issuance time approaches, below are the predictions of analysts and experts 

Core PCE is anticipated to increase by 0.3 percent in April (MoM) while remaining steady at 4.6% y/y. The overall economy is anticipated to rise by 0.4 percent in April, with the yearly rate slowing to 4.2% to 3.9%.

The US dollar may receive additional support from today’s PCE data if the reading is stronger than anticipated. The Core PCE Index is projected for today to come in at 4.6%. A better-than-expected result might support the Fed’s officials’ latest aggressive statements about likely rate rises in June as well as afterwards.

Eonomic Activity Schedule

Technical Perspective

On the daily time scale, the GBPUSD has been moving down to the significant 100-day MA. Which is now located at the 1.2280 level. The duo’s rebound this morning happened as it approached oversold zone (14-Day RSI), reaching a peak of about 1.2354.

The US considerations listed above could continue to limit any upward rebound when considering the intraday possibilities for the GBPUSD. The result of the PCE statistics will decide whether we find significant support as well as a possible bottom at the 100-day MA. The 100-day MA’s span from 1.2360 to 1.2280 could stay to be crucial for intraday movements.

It’s conceivable that the market will keep rising for the duration of the European day. Perhaps reaching the previous day’s top near 1.2388, before falling sharply towards the US period and data reports.

Important Intraday Levels to Monitor

Key Resistance levels:

• 1.2388
• 1.2448
• 1.2500

Key support levels:

• 1.2310
• 1.2280 (100-day MA)
• 1.2220