GBP/USD Forecast: Buyers need to defend 1.2600 to remain in control

GBP/USD has lost its bullish momentum early Friday.
Buyers could move to the sideline if 1.2600 support fails.
Focus shifts to PCE inflation data from the US.

Eren Sengezer FXStreet

GBP/USD has erased its daily gains after having advanced to a monthly high of 1.2667 earlier in the day. The pair faces key support at 1.2600 and buyers could struggle to dominate the price action in case this level turns into resistance.

The broad-based selling pressure surrounding the greenback fueled GBP/USD's upside in the second half of the week. The improving market mood made it difficult for the dollar to stay resilient against its rivals and the US Dollar Index fell to its weakest level since late April below 102.00.

In the meantime, British Finance Minister Rish Sunak announced on Thursday that they will send one-off payments of £650 to lowest-income households to help them with rising prices. In an interview with Sky News on Friday, Sunak argued that the support package would have a "minimal impact" on inflation. These comments, however, failed to help the British pound gather strength.

The US economic docket will feature the Personal Consumption Expenditures (PCE) Price Index data from the US. In case the annual Core PCE Price Index, which the Fed uses when conducting its monetary policy, comes in lower than the market expectation of 4.9%, the dollar could face renewed selling pressure. On the other hand, investors could start seeking refuge if the data suggests that inflation continued to run hot in April.

In short, the risk perception is likely to impact the dollar's valuation ahead of the weekend and drive GBP/USD's action.

GBP/USD Technical Analylsis

GBP/USD was last seen trading near 1.2600, where the 200-period SMA is located. If the pair falls below that level and starts using it as resistance, buyers could move to the sidelines and allow GBP/USD to go into a consolidation phase.

On the downside, next support is located at 1.2550 (static level) ahead of 1.2500 (50-period SMA, psychological level).

On the flip side, static resistance seems to have formed at 1.2650. A four-hour close above that level could open the door for additional gains toward 1.2700 (psychological level, static level). Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart stays near 60, suggesting that sellers are yet to take control of the action.

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.

GBP/USD stays defensive near 1.3450 amid Mideast uncertainty

GBP/USD drifts lower to near 1.3460 in European trading on Thursday. Conflicting rhetoric from US and Iranian officials about a potential deal fuels market concerns, allowing the US Dollar to attract some haven demand. Next of note for the major is the US Initial Jobless Claims report, while Mideast headlines will remain in play.

EUR/USD turns lower toward 1.1500 as USD finds demand

EUR/USD is turning south toward 1.1500 in the European session on Thursday, pressured by a modest US Dollar rebound. Markets stay wary about the prospects of a US-Iran peace deal and the reopening of the Strait of Hormuz, keeping the safe-haven USD underpinned. The focus is now on the US Jobless Claims data, following weak Eurozone Retail Sales report.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Top Altcoins: Ripple, Cardano, and Solana vulnerable to deeper losses

Ripple, Cardano, and Solana are trading in the red on Thursday, facing downside pressure. The technical outlook for altcoins is bearish, as XRP risks falling below $1.00, ADA is eyeing the 50-day Exponential Moving Average at $0.1766, and SOL remains capped below a cluster of resistance levels.

AI defies the disinflationary playbook: Why lower oil prices might not be enough to cool core inflation

The global economic landscape has been fixated on the Middle East since the US-Iran war started in late February, reacting to significant changes in crude Oil prices and assessing how they could influence inflation dynamics and growth outlook.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.