Technical Outlook
Support Levels:
1.3500
1.3445
1.3310
Resistance Levels:
1.3595
1.3625
1.3960
Indicators:
RSI: Approaching overbought territory, indicating potential for short-term pullback
MACD: Positive, supporting bullish trend
Moving Averages: Price trading above the 20, 50, and 100-day SMAs, indicating sustained upward momentum
The GBP/USD pair has broken above key resistance levels, showing strong bullish momentum. However, technical indicators suggest a possible short-term consolidation before further gains.
Fundamental Developments
UK Economic Data: Strong UK retail sales and persistent inflation have strengthened the pound, leading to speculation that the Bank of England may pause rate cuts in the upcoming meeting.
US Fiscal Concerns: Moody's downgraded the US credit rating from AAA to AA1, citing increasing debt-to-GDP projections. This development has weakened the US dollar, supporting GBP/USD gains.
US Economic Outlook: The US dollar remains under pressure due to deficit concerns linked to recent tax legislation and potential rate cuts by the Federal Reserve.
Weekly Outlook & Strategy
Bullish Scenario:
Sustained trading above 1.3500 could lead to a test of 1.3595 and potentially 1.3625. A break above this level may target 1.3960.
Bearish Scenario:
Failure to hold above 1.3500 may result in a pullback towards 1.3445 or even 1.3310.
Neutral Scenario:
The pair may consolidate between 1.3500 and 1.3625 before determining its next directional move.
Key Events to Watch This Week
28 May (Wednesday):
UK CBI Distributive Trades Survey
US Durable Goods Orders
29 May (Thursday):
US Initial Jobless Claims
US GDP Second Estimate
30 May (Friday):
US Core PCE Price Index 44