British Pound Outlook: GBP/USD
GBP/USD climbs to a fresh weekly high (1.3577) as it stages a three-day rally, but the exchange rate may no longer track the positive slope in the 50-Day SMA (1.3524) after closing below the moving average for the first time since April.
British Pound Forecast: GBP/USD Stages Three Day Rally
GBP/USD carves a series of higher highs and lows as it extends the advance from the start of the week, and the exchange rate may further retrace the decline from the monthly high (1.3789) as the UK Retail Sales report is anticipated to show a rebound in household spending.
UK Economic Calendar
Retail spending is expected to increase 1.2% in June after contracting 2.7% the month prior, and a positive development may keep GBP/USD afloat as it raises the Bank of England’s (BoE) scope to keep UK interest rates on hold.
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In turn, the BoE may stick to the sidelines following the 6–3 split in June to keep the Bank Rate at 4.25%, but a weaker-than-expected UK Retail Sales report may produce headwinds for the British Pound as it puts pressure on Governor Andrew Bailey and Co. to further unwind its restrictive policy.
With that said, GBP/USD may hold within the monthly range ahead of the next BoE meeting on August 7 after closing below the 50-Day SMA (1.3524) for the first time in April, but the exchange rate may further retrace the decline from the monthly high (1.3789) as it carves a series of higher highs and lows.
GBP/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView
- GBP/USD extends the advance from the start of the week to carve a bullish price series, with a move/close above 1.3650 (38.2% Fibonacci extension) bringing the monthly high (1.3789) on the radar.
- Need a move/close above the 1.3800 (161.8% Fibonacci extension) to 1.3810 (50% Fibonacci extension) region to open up the October 2021 high (1.3835), but the recent rebound in GBP/USD may turn out to be temporary should it give back the advance from the weekly low (1.3403).
- Failure to defend the monthly low (1.3365) may push GBP/USD toward 1.3310 (100% Fibonacci extension), with the next area of interest coming in around the May low (1.3140).
Additional Market Outlooks
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USD/CHF Struggles After Testing Former Support Zone
EUR/USD Coils Ahead of ECB Interest Rate Decision
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
