🔍 Technical Outlook
Support Levels:
• 1.3280
• 1.3200
• 1.3140
Resistance Levels:
• 1.3400
• 1.3445
• 1.3565
Indicators:
• RSI: Approaching overbought territory, suggesting potential for consolidation
• MACD: Positive crossover, indicating bullish momentum
• 50-day SMA: Trending upward, supporting a bullish outlook
The pair has been trading within a rising channel, with recent price action testing the upper boundary near 1.3400. A sustained break above this level could signal further gains, while failure to do so may lead to a pullback towards support levels.
📰 Fundamental Developments
• UK-EU Trade Reset: The UK and EU have agreed on a significant trade and defense relations reset, easing post-Brexit tensions. This development has bolstered investor confidence in the pound.
• US Credit Rating Downgrade: Moody's downgraded the US credit rating from Aaa to Aa1, citing rising federal debt. This has weakened the US dollar, providing support to GBP/USD.
• Upcoming UK Inflation Data: Investors are awaiting UK inflation figures due on Wednesday, which could influence the Bank of England's policy decisions. Markets anticipate a 25 basis point rate cut at the BoE’s June meeting.
📌 Weekly Outlook & Strategy
Bullish Scenario:
A break above 1.3400 could open the path to 1.3445 and potentially 1.3565. Positive UK economic data and continued US dollar weakness would support this move.
Bearish Scenario:
Failure to sustain above 1.3400 may lead to a pullback towards 1.3280 and 1.3200. Stronger-than-expected US economic data could bolster the dollar, pressuring GBP/USD lower.
Neutral Scenario:
Consolidation between 1.3280 and 1.3400 as markets digest recent developments and await key data releases.
📅 Key Economic Events
• 21 May (Wednesday): UK Consumer Price Index (CPI) data release
• 22 May (Thursday): US Initial Jobless Claims
• 23 May (Friday): UK Retail Sales figures