- The GBP/USD is gaining up some 0.18% in the week amidst a thin liquidity trading session.
- A buoyant US dollar and risk-aversion weighed on the British pound in the week.
- GBP/USD Price Forecast: To remain downward biased but a double bottom looms.
The British pound remains defensive, trading below the 1.3100 mark, on the back of a buoyant US dollar amidst a dull trading session as financial markets are closed In the observance of Easter Friday. The GBP/USD is trading at 1.3061 at the time of writing.
The GBP/USD has remained under pressure in the week. A stronger US dollar and diminished risk appetite spooked GBP bulls, as the GBP/USD is about to end the week with modest gains of 0.18%. Contrarily, the US Dollar Index, a gauge of the greenback’s value against a basket of its rivals, edges up 0.68%, sitting at 100.519, underpinned by high US Treasury yields throughout the week.
During the week, the UK’s mixed economic data kept the GBP/USD trading around 1.3000-1.3160. UK inflation rose above the 7% threshold, higher than the 6.7% estimated, opening the door for a subsequent 25 bps rate hike by the Bank of England. Meanwhile, the Gross Domestic Product (GDP) for February disappointed, increased by 0.1% m/m, lower than the 0.3% estimations, giving a signal that the UK’s economy is slowing. Regarding labor figures, data came mixed, with Employment Change for January disappointing, with just 10K new jobs vs. 50K foreseen, while the Unemployment Rate for February came at 3.8%, aligned with estimations.
In the meantime, the US economic docket revealed that consumer inflation in March rose above the 8% threshold, at 8.5% y/y, the highest since 1981, while excluding volatile items, the so-called core, increased 6.5%, lower than the 6.7%, a signal that inflation was about to peak. Nonetheless, on Thursday, the Producer Price Index (PPI) sent the previous day’s expectations over the board, showing that prices paid by producers rose by 11.2% vs. 10.6% estimations. In comparison, core PPI increased by 9.2%, higher than 8.4%.
In the week ahead, the economic calendar will feature tier 2 data. In the UK, March’s Retail Sales are expected to show a contraction of 0.3%. On the US front, the docket will unveil the Fed Beige Book and S&P Global Manufacturing and Services PMIs.
GBP/USD Price Forecast: Technical outlook
The GBP/USD depicts a double bottom formation around the 1.3000 area, but the daily moving averages (DMAs) located above the spot price suggest the pair is downward biased. In line with the aforementioned is the Relative Strength Index (RSI) at 42.60, though it is worth noting the horizontal slope of the oscillator, which means the pair might consolidate around the 1.3050s area before resuming downwards.
The GBP/USD first support would be 1.3000. Once cleared, the next support would be 1.2900, followed by November 2020 cycle low at 1.2853.
However, to confirm the double bottom scenario, the GBP/USD needs to lift towards March 23 swing high at 1.3299. Once accomplished, the GBP/USD first resistance would be the 100-day moving average (DMA) at 1.3358, followed by 1.3400, and then the 200-DMA at 1.3518.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps range near 1.0650 ahead of German IFO survey
EUR/USD is keeping its range play intact near 1.0650 in the early European hours on Monday. Markets stay risk-averse, weighing the Fed's 'higher-for-longer' rate view and lingering China's property market woes. Germany's IFO survey eyed.
GBP/USD remains on the defensive below the 1.2250
GBP/USD remains on the defensive below the mid-1.2200s early Monday. The US Dollar is clinging to the previous week's gains alongside firmer US Treasury bond yields while the Pound Sterling weighs the Fed-BoE policy divergence amid a quiet calendar.
Gold remains stuck below key averages, what’s next?
Gold price is easing toward $1,920, making it for a negative start to a key week ahead. The United States Dollar (USD) and the US Treasury bond yields have entered a phase of consolidation near last week’s high, as investors look to this week’s inflation data from the US and Europe for a fresh directional impetus.
Ethereum whales prepare ahead of futures Ethereum ETF approval on October 2
Ethereum price is likely going to witness a massive spike in volatility soon due to the circumstances surrounding the approval of the token’s futures Exchange-Traded Fund (ETF). According to Twitter users, the ETF is likely going to be approved on October 2.
Is inflation falling further?
A first flash estimate of Eurozone inflation in September is expected. In August, inflation fell slightly to 5.2%. While the downward pressure from energy prices has eased slightly, the momentum of food prices has continued to decline.