

Market Analysis
The Pound Sterling (GBP) weakened against most major currencies during Wednesday’s London session, with the exception of Asia-Pacific currencies. The British currency is under pressure amid increasing speculation that the Bank of England (BoE) might start reducing interest rates in August.
Market analysts observe that the UK economy is struggling under the BoE’s high interest rates. The effects of this tight monetary policy are evident in consumer spending, as reflected in the UK’s Retail Sales figures, which contracted more sharply than expected in June.
Meanwhile, BoE officials have been hesitant to endorse rate cuts due to persistently high inflation in the service sector. Service sector inflation in the UK increased by 5.7% in June.
Attention now shifts to the preliminary UK S&P Global/CIPS Purchasing Managers’ Index (PMI) data for July, which could provide fresh insights into the state of the economy. The Composite PMI is projected to rise to 52.6 from the previous 52.3, driven by increased activity in both the manufacturing and service sectors. Additionally, political stability following UK Prime Minister Keir Starmer’s victory with an absolute majority has boosted employer confidence in economic prospects.
Technical Analysis: Pound Sterling Falls Below 1.2900
The Pound Sterling has dropped below the significant support level of 1.2900 against the US Dollar. The GBP/USD pair is approaching the horizontal support level from the March 8 high, which previously served as resistance for the Pound. The pair is nearing the 20-day Exponential Moving Average (EMA), currently around 1.2860.
The 14-day Relative Strength Index (RSI) has moved back into the 40.00-60.00 range, indicating a reduction in bullish momentum, although the bullish bias remains.
On the upside, the key resistance zone is at a two-year high near 1.3140. Conversely, the upward-sloping trendline from the April 22 low will serve as significant support around 1.2750.
Paraphrasing text from "FX Street" all rights reserved by the original author.