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The GBP/USD declines, approaching 1.2350 during early European trading on Friday. The Pound Sterling is facing downward pressure due to unfavorable UK Retail Sales data. While the US Dollar is gaining ground in a market marked by caution. The focus is now on US housing data.
GBP/USD Declines: Technical Analysis and Key Levels
The support level established near 1.2400, marked by the upper limit of the broken ascending regression channel. Maintaining levels above this may sustain buyer interest, with 1.2430 serving as a potential interim resistance. Followed by 1.2500, a psychological level, and the Fibonacci 38.2% retracement of the July-October downtrend.
Should GBP/USD fail to hold above 1.2400 and turns it into a resistance, 1.2320 (50-period Simple Moving Average) and 1.2300 (mid-point of the ascending channel) considered support levels.
Also Read: Asian Markets Trends: Strong Anticipated and Data Releases
On Thursday, GBP/USD consolidated around 1.2400 after a notable downward correction on Wednesday. The near-term technical outlook suggests a persistent bullish bias.
Soft UK Inflation, US Retail Sales, and Federal Reserve Policy on GBP/USD
Soft UK inflation data on Wednesday impacted the Pound Sterling negatively. While the US Dollar gained momentum after October Retail Sales declined less than anticipated. Consequently, GBP/USD extended its correction in the latter part of the day.
Thursday’s focus includes the release of weekly Initial Jobless Claims data by the US Department of Labor and speeches from several Federal Reserve (Fed) policymakers. Market expectations of a Fed policy rate reduction in the second half of 2024, following weaker-than-expected October Consumer Price Index (CPI) data, might be challenged by policymakers. If they indicate a reluctance to lower interest rates soon, the USD could strengthen, posing challenges for GBP/USD to regain momentum.
