English
English
Tiếng Việt
ภาษาไทย
繁體中文
한국어
Bahasa Indonesia
Español
Português
zu-ZA
0

Market Analysis

Pound Sterling Pulls Back from 1.2700 Amid Focus on UK Inflation and BoE Policy Outcome
Amos Simanungkalit · 13.4K Views

The Pound Sterling (GBP) is under selling pressure as it struggles to maintain its recovery above the significant 1.2700 resistance level against the US Dollar (USD) during Tuesday’s London session. The GBP/USD pair has edged lower as the US Dollar rebounds following a modest correction from a six-week high. The US Dollar Index (DXY), which measures the greenback’s value against six major currencies, remains above 105.00 as Federal Reserve (Fed) officials advocate for only a single interest rate cut this year.

 

Fed policymakers are cautious about premature rate cuts, emphasizing the need for sustained inflation decline over several months to ensure confidence in reducing interest rates. Concerns linger about the potential reacceleration of price pressures despite recent progress in the disinflation process, which had previously stalled in the first quarter of the year.

 

On Monday, Philadelphia Fed Bank President Patrick Harker stressed the importance of maintaining current rates to continue exerting downward pressure on inflation across sectors such as housing and services, particularly auto insurance and repairs. Harker indicated that he foresees one rate cut this year, contingent on his economic forecast, as reported by Reuters.

 

In terms of economic data, investors are keenly awaiting the release of the United States (US) Retail Sales data for May at 12:30 GMT. This data, a key indicator of consumer spending and inflation trends, is expected to show a 0.3% increase following a flat reading in April.

 

Technical Analysis: Pound Sterling Struggles Near 1.2700 Resistance

 

image.png

 

The Pound Sterling is facing difficulty extending its recovery above the critical 1.2700 resistance level against the US Dollar. The GBP/USD pair encounters selling pressure near the 20-day Exponential Moving Average (EMA), indicating uncertainty in the near-term trend. The 50-day EMA near 1.2670 is providing significant support for the Pound Sterling bulls.

 

Currently, the pair is holding above the 61.8% Fibonacci retracement support level, calculated from the March 8 high of 1.2900 to the April 22 low of 1.2300, at 1.2667.

 

The 14-period Relative Strength Index (RSI) has retreated to the 40.00-60.00 range, suggesting that the previous upward momentum has diminished.

 

 

 

Paraphrasing text from "FX Street" all rights reserved by the original author.

Need Help?
Click Here