GBP/USD Forecast: Pound Sterling needs to stabilize above 1.2870 to rebound

GBP/USD trades below 1.2900 ahead of the weekend.
The pair could stage a rebound if it manages to confirm 1.2870 as support.
Upbeat UK Retail Sales data failed to help Pound Sterling gather strength.

Eren Sengezer FXStreet

GBP/USD stays relatively calm on Friday and trades near 1.2870, a key pivot point in the short term. The pair closed in negative territory for a fifth consecutive day on Thursday, dropping below 1.2850 for the first time in 10 days.

After the US Department of Labor reported on Thursday that the weekly Initial Jobless Claims declined to 228,000 in the week ending July 15, the lowest reading since the second week of May, the US Dollar (USD) gathered strength, weighing on GBP/USD.

Early Friday, the UK's Office for National Statistics reported that Retail Sales rose 0.7% on a monthly basis in June. This reading came in much better than the market expectation for an increase of 0.2% but failed to trigger a noticeable market reaction.

"We are at a crucial juncture and need to avoid reckless spending," UK Finance Minister Jeremy Hunt said. "As this week's fall in inflation showed, we will start to see results if we stick to our plan to halve inflation, grow the economy and get debt falling," he added. Despite this remarks, GBP/USD remained in its daily range.

The US economic docket will not feature any high-impact data releases. Position readjustment and profit-taking ahead of next week's key Federal Reserve policy meeting could ramp up market volatility toward the end of the European session.

GBP/USD Technical Analysis

GBP/USD trades near 1.2870, where the Fibonacci 50% retracement level of the latest uptrend and the 100-period Simple Moving Average (SMA) form a key pivot point. If that level is confirmed as resistance, 1.2800 (Fibonacci 38.2% retracement) and 1.2770 (200-period SMA) could be set as next bearish targets.

On the upside, an extended recovery toward 1.2900 (psychological level), 1.2930 (Fibonacci 38.2% retracement, 20-period SMA) and 1.3000 (Fibonacci 23.6% retracement, 50-period SMA) could be seen once GBP/USD stabilizes above 1.2870.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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 clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.