GBP/USD Forecast: 1.2500 proves to be a tough resistance to crack

GBP/USD has been having a hard time clearing 1.2500.
The near-term technical outlook favors the bulls ahead of key US data.
Risk aversion could cause the pair to stretch lower ahead of the weekend.

Eren Sengezer FXStreet

GBP/USD has edged slightly lower after having failed to clear 1.2500 for the third straight day on Friday. The near-term technical outlook doesn't yet point to a buildup of bearish momentum. In the second half of the day, risk perception and key macroeconomic data releases from the US could drive the pair's action.

Although the data from the US revealed on Thursday that the economy expanded at an annual rate of 1.1% in the first quarter, compared to the market expectation of 2%, the US Dollar (USD) stayed resilient against its rivals. The significant negative contribution of 2.26 percentage point of the change in private inventories to the GDP showed that the US economy has performed better than what the data suggests. Furthermore, the details of the report showed that consumer activity remained healthy despite strengthening price pressures in Q1.

Early Friday, the US Dollar Index builds on Thursday's modest gains and doesn't allow GBP/USD to regain its traction. Meanwhile, US stock index futures trade in negative territory, reflecting a risk-averse market environment.

In the second half of the day, the Personal Consumption Expenditures (PCE) Price Index for March, the Federal Reserve's preferred gauge of inflation, from the US will be featured in the US economic docket. Since the quarterly reading of the PCE inflation data was already revealed in Thursday's GDP report, this data is unlikely to trigger a significant reaction.

Market participants will pay close attention to Employment Cost Index data for the first quarter, which is expected to come in at 1.1%. A stronger-than-expected print could help the USD gather further strength ahead of the weekend and vice versa. A negative opening in Wall Street could also provide additional support to the USD and weigh on the pair.

It's also worth noting that month-end flows on the last trading day of April could ramp up volatility toward the end of the European session and cause usual inter-market correlations to weaken.

GBP/USD Technical Analysis

GBP/USD faces key support at 1.2450, where the 50-period and the 100-period Simple Moving Averages (SMA) on the four-hour chart are located. A four-hour close below that level could open the door for an extended slide toward 1.2400 (psychological level, static level) and 1.2370 (200-period SMA, Fibonacci 23.6% retracement of the latest uptrend).

On the upside, buyers could show interest in case GBP/USD rises above 1.2500 and starts using that level as support. In that scenario, 1.2550 (end-point of the uptrend) and 1.2600 (psychological level) could be seen as next bullish targets.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.