GBP/USD Forecast: Pound Sterling struggles to clear key technical level
- GBP/USD stays below 1.2650 following Thursday’s modest recovery.
- May PCE inflation data from the US could drive the USD’s valuation on Friday.
- Quarter-end flows could trigger irregular movements in markets heading into the weekend.
Following Wednesday’s sharp decline, GBP/USD registered modest gains on Thursday. The pair, however, failed to pull away from the key 1.2640 level, reflecting the buyers’ hesitancy.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the weakest against the Australian Dollar.
| Â | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | Â | -0.03% | 0.05% | 0.58% | 0.08% | -0.12% | 0.71% | 0.65% |
| EUR | 0.03% | Â | 0.10% | 0.65% | 0.15% | -0.06% | 0.79% | 0.76% |
| GBP | -0.05% | -0.10% | Â | 0.51% | 0.06% | -0.16% | 0.69% | 0.66% |
| JPY | -0.58% | -0.65% | -0.51% | Â | -0.48% | -0.66% | 0.17% | 0.08% |
| CAD | -0.08% | -0.15% | -0.06% | 0.48% | Â | -0.20% | 0.63% | 0.60% |
| AUD | 0.12% | 0.06% | 0.16% | 0.66% | 0.20% | Â | 0.85% | 0.82% |
| NZD | -0.71% | -0.79% | -0.69% | -0.17% | -0.63% | -0.85% | Â | -0.04% |
| CHF | -0.65% | -0.76% | -0.66% | -0.08% | -0.60% | -0.82% | 0.04% | Â |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Earlier in the day, the UK’s Office for National Statistics reported that the annualized Gross Domestic Product (GDP) growth for the first quarter got revised higher to 0.3% from the 0.2% announced in the flash estimate. This data failed to trigger a noticeable market reaction.
Early Friday, GBP/USD trades in a relatively tight range below 1.2650. In the second half of the day, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve’s (Fed) preferred gauge of inflation, for May.
On a monthly basis, the core PCE Price Index, which excludes volatile food and energy prices, is forecast to rise only 0.1% following the 0.2% increase recorded in April. A reading at or below the market expectation could feed into expectations for a Fed rate cut in September and hurt the USD. On the flip side, markets could turn reluctant to bet on a September policy pivot if the monthly core PCE Price Index rises 0.2% or more. In this scenario, GBP/USD could stay on the back foot.
Profit-taking and position adjustments on the last trading day of the second quarter could trigger sharp actions in currency pairs and distort the impact of the PCE inflation data on financial assets.
GBP/USD Technical Analysis
The 100-day and the 50-day Simple Moving Averages (SMA) form a key pivot level at 1.2640. If GBP/USD confirms this level as resistance, technical sellers could take action and open the door for an extended slide toward 1.2600 (psychological level, static level), 1.2580 (Fibonacci 50% retracement) and 1.2550 (200-day SMA).
On the upside, 1.2670Â (50-period SMA on the 4-hour chart) aligns as interim resistance before 1.2710-1.2720 (200-period SMA, Fibonacci 23.6% retracement of the latest downtrend) in case GBP/USD starts using 1.2640 as support.
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