GBP Weekly Perspective: A Sturdy Pound Gets Ready for Next Week with Lots of Data – Fundamental and Technical Perspective.

Market Considerations and Analytics

• Key Notes
• The weak USD could be boosted next week, making the GBP vulnerable.
• UK and US economic calendars that are stacked.
• Risen wedge break is imminent.

Fundamental View – Bearish

After the USD failed to profit from stronger-than-expected economic data (PPI and Michigan consumer confidence) previous Friday, the British pound enters a central bank-driven week in a pretty strong position. This follows solid NFP labor market statistics and solid ISM services PMI data. According to the economic calendar beneath, there are a tons of data points slated for the coming week, therefore it appears that markets are delaying their reaction to this information. Although there is a lot of UK-specific data, the U.S. core inflation reading and Federal Reserve interest rate announcement are likely to dominate the attention of investors worldwide. Without any guidance from Fed policymakers during this FOMC blackout, the Fed has been torn by the contrasting weaker inflation and the aforementioned encouraging indicators.

Given that monetary policy has been hardening in the UK and that fiscal policy is aligned with the Bank of England (BoE), the rate decision for the following week is probably going to stay at the 50bps level. Money markets currently agree with this hypothesis with a probability of roughly 88%.   The Fed is in a similar situation, so neither central bank is likely to make an unexpected statement anytime soon. Markets will be watching the Fed press conference in anticipation of Fed Chair Jerome Powell’s remarks. His prior comment, which was inevitably interpreted as being dovish regarding monetary policy, discussed limiting future rate increases.

Following the recent push over the 200-day SMA, the daily GBP/USD price action is still following the rising wedge pattern.  Despite this, bulls have not been particularly motivated to take advantage of this development, which may indicate that the bullish impetus is weakening. There is still some possibility for more pound appreciation since the Relative Strength Index (RSI) is approaching overbought territory, but given the underlying challenges confronting the UK, there may be room for a leg south on the cable couple. The 1.2000 and 1.1900 support levers, that should correspond with wedge support, might be made visible by a confirmation closure underneath the 200-day SMA.

Technical Analytics

Key resistance levels:

Key support levels:

61% of retail traders now have short bets on the GBP/USD currency pair. We normally take the opposite stance to the general consensus, but recent shifts in long and short positions have led us to adopt a short-term cautionary inclination.

Technical Summary- Weekly

GBP/USD