GBP/USD Forecast: Pound Sterling stays below key resistance levels

GBP/USD declined below 1.2600 on Thursday but managed to stabilize above that level early Friday. In the absence of high-tier data releases, the risk perception could impact the US Dollar's (USD) valuation.

The USD benefited from recovering US Treasury bond yields on Thursday and weighed on GBP/USD. Hawkish remarks from Bank of England (BoE) officials and the modest improvement seen in risk mood, however, helped the pair erase its losses.

Bank of England (BoE) policymaker Catherine Mann explained on Thursday that she voted in favor of a rate hike in the last policy meeting because she is not convinced that the near-term declaration in headline inflation will continue. Early Friday, BoE policymaker Jonathan Haskel acknowledged that inflation pressures might be on the wane but he noted that he would need further evidence of a slowdown before altering his view on the rate outlook.

Following Thursday's indecisive action in Wall Street, US stock index futures trade modestly higher in the European session on Friday. In case there is a bullish opening, the USD could come under renewed selling pressure in the second half of the day.

Later in the day, the US Bureau of Labor Statistics will release its annual revisions of the last 5 years of seasonally adjusted Consumer Price Index data. Although it's difficult to say how the markets would react to revisions to inflation figures, GBP/USD's volatility could ramp up.

GBP/USD Technical Analysis

1.2650 (Fibonacci 23.6% retracement of the latest uptrend) aligns as immediate resistance for GBP/USD. In case the pair manages to flip that level into support, 1.2680 (20-day Simple Moving Average (SMA), 50-day SMA) could act as stiff resistance before 1.2700 (psychological level, 200-period SMA on the 4-hour chart).

On the downside, supports are located at 1.2600 (static level, psychological level), 1.2565 (200-day SMA) and 1.2540 (Fibonacci 38.2% retracement).