- GBP/USD retreated after meeting resistance near 1.2500 on Monday.
- UK PM Sunak says they can shift their focus to lowering taxes.
- The pair's near-term technical picture suggests that the bullish bias remains intact.
Following the downward correction seen in the second half of the previous week, GBP/USD opened on a bullish note and climbed toward 1.2500 before losing its traction. The pair's technical outlook suggests that the bullish bias remains intact despite the recent pullback.
Although the US Dollar (USD) stood under heavy selling pressure last week, soft inflation readings from the UK made it difficult for GBP/USD to extend its uptrend. Early Monday, the pair edged higher on improving risk sentiment but struggled to surpass 1.2500. At the time of press, US stock index futures were trading modestly higher on the day.
Pound Sterling price in the last 7 days
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies in the last 7 days. Pound Sterling was the strongest against the US Dollar.
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Meanwhile, British Prime Minister Rishi Sunak said on Monday that they can begin the next phase of the fiscal policy and turn attention to cutting taxes now that inflation is halved. Sunak further noted that taxes can be cut once they control inflation and debt, adding that they want to support businesses to invest through lower taxes.
These comments don't seem to be having a noticeable impact on risk sentiment, with the UK's FTSE 100 Index trading flat on the day.
The US economic calendar will not be offering any high-impact data releases on Monday and the risk perception could drive the pair's action.
GBP/USD Technical Analysis
GBP/USD was last seen trading near 1.2470, where the Fibonacci 38.2% retracement of the July-October downtrend is located. In case the pair confirms that level as resistance, it could extend its downward correction toward 1.2430 (20-period Simple Moving Average (SMA), upper limit of the broken ascending regression channel) and 1.2400 (psychological level, static level).
On the upside, 1.2500 (psychological level, static level) aligns as first resistance before 1.2530 (static level) and 1.2600 (Fibonacci 50% retracement).
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