GBP/USD Weekly Forecast: Pound Sterling rises ahead of UK-centered data week

The Pound Sterling reached a three-week top against the Greenback.
GBP/USD closed its second consecutive week of gains.
Investors’ attention now shifts to the BoE gathering and the preliminary UK GBP data for the first quarter.

Pablo Piovano FXStreet

The British Pound (GBP) extended its march north against the US Dollar (USD) throughout the week, motivating GBP/USD to break above the 1.2600 figure for the first time since mid-April.

Meanwhile, the Pound Sterling experienced continued buying pressure against the US Dollar following an auspicious start to the week. This renewed upside bias coincided with diminished demand for the US Dollar, which was exacerbated in response to the dovish tilt (or at least not as hawkish as expected) by the Federal Reserve (Fed) at its meeting on Wednesday as well as by Chairman Jerome Powell at his subsequent press conference.

Absent important data releases in the UK economic calendar this week, the focal point of the past five days was the above-mentioned Fed’s event and Nonfarm Payrolls (NFP) on Friday, which showed the US economy added fewer jobs than previously anticipated (+175K) during April.

Also adding to the dominating appetite for the risk-linked galaxy, and hence, underpinning the bullish momentum around the British pound and its peers, geopolitical concerns, mainly in the Middle East, appeared to have entered a wait-and-see mode amidst some gradual progress towards a potential ceasefire between the conflicting parties.

Moving forward, the BoE and key UK GDP data

The upcoming week should be quite an interesting one for the quid, as the BoE meets on Thursday, and it is widely expected that the central bank will keep interest rate unchanged. Speculation among investors anticipates the first rate cut by the “Old Lady” in August or September, while another rate reduction appears fully priced in for December. On Friday, UK the Gross Domestic Product (GDP) release for the first quarter will also be on the traders’ radar, as it could show that the UK economy overcame the shallow recession it sank into during the second half of 2023.

GBP/USD: Technical Outlook

The so-far May top at 1.2634 (May 3) is the upcoming resistance level for GBP/USD. A breakthrough above this level could prompt a revisit of the April peak at 1.2709 (April 9), likely followed by the weekly high of 1.2803 (March 21), and even extend to the 2024 top at 1.2893 (March 8). Further up, the pair could meet the weekly peak of 1.2995 (July 27, 2023), just below the psychological 1.3000 yardstick.

Conversely, initial support is found at the 2024 low of 1.2299 (April 22), followed by the weekly low of 1.2187 (November 10), and preceding the October 2023 bottom of 1.2037, and the crucial contention zone of 1.2000. Observing the daily chart, the Relative Strength Index (RSI) climbed beyond the 55 level.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

GBP/USD revisits 1.3530; Dollar pushes harder

GBP/USD adds to the weekly correction and recedes toward the 1.3530 zone on Friday. Indeed, Cable faces increasing selling pressure on the back of extra gains in the Greenback, particularly fuelled by Chair Warsh’s speech at the Jackson Hole Symposium and the US NFP Annual Revision (-79K).

EUR/USD breaches below 1.1600, multi-day lows

EUR/USD now accelerates its decline and retreats to seven-day troughs in the sub-1.1600 region at the end of the week. The pair’s pullback comes on the back of the strong rebound in the US Dollar after Chair Warsh delivered a hawkish message in Jackson Hole, while the US NFP Annual Revision came in at -79K.

Gold challenges its 200-day SMA near $4,530

Gold’s decline gathers fresh steam, hitting weekly lows while disputing its critical 200-day SMA near $4,530 per troy ounce. The yellow metal’s increasing weakness comes in response to the generalised upbeat tone in the US Dollar and the widespread rebound in US Treasury yields, as investors continue to reprice a Fed rate hike in September.

Crypto Today: Bitcoin, Ethereum, XRP rally loses steam despite steady ETF inflows

Bitcoin is back below $80,000 at the time of writing on Friday, after a second attempt at breaking resistance between $81,000 and $82,000. Meanwhile, Ethereum and Ripple mirror Bitcoin’s cooling trend, with ETH sliding to $2,500 and XRP falling toward $1.40 support.

Week ahead – RBNZ and BoC decide on rates ahead of all-important US NFP

Dollar rebounds ahead of ISM PMI and NFP data. RBNZ is expected to raise rates; focus to fall on forward guidance. BoC is set to remain on hold; will it raise rates in 2027?

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.