According to the performance on the daily chart below, the price of the GBP/USD is still under downward pressure, with its abandonment of the psychological resistance level at 1.3000. 

What helped improve the performance of the sterling at the beginning of the week's trading was a strong increase in real terms in Japanese retail sales for June and a better-than-expected read by the China Federation of Logistics and Purchasing (CFLP), the Manufacturing PMI pushed the dollar back slightly while helping lift other currencies including the pound sterling. The rise in the Asia-Pacific currencies saw continued pressure on the dollar while the pound helped maintain a foothold above the 1.28 level after the level rebounded on Friday and went into an action-packed period for economic data, government bond markets, and BoE policymakers at the opening of the new week's trading.

Commenting on the performance of the currency pair. David Sneddon, an Analyst at Credit Suisse said that “The decline in GBP/USD was contained as expected by its bullish trend from September last year, which we see now at 1.2775 and we similarly view this as a corrective and only temporary decline before The breach above the resistance at 1.3143, and the recent high for the next resistance at 1.3299”

The risk comes thick and fast from the start of buying sterling this week with money supply and credit numbers from the Bank of England on Monday before it is followed by a two-year bond auction on Tuesday, the Bank of England interest rate decision on Thursday, and a speech from the Bank of England chief economist Friday. Among all this, the pound-to-dollar rate must navigate a crowded US economic calendar including a new set of ISM surveys of the manufacturing and services sectors on Tuesday and Thursday, as well as three different gauges of the US labor market on Tuesday, Wednesday, and Friday.

Some analysts see relatively balanced risks to sterling in the short term, with significant hinges on the outcome of Thursday's BoE rate decision as the consensus of economists points to a bank rate increase from 5% to 5.25% and market pricing carries some larger movement risks.

GBP/USD Technical Outlook

According to the performance on the daily chart below, the price of the GBP/USD is still under downward pressure, with its abandonment of the psychological resistance level at 1.3000. I expect the currency pair to remain moving in a narrow range with a bearish tendency until the reaction to the Bank of England announcements and US job numbers. According to the current move, the bears' control over the direction will increase, as the currency pair moves towards the support levels at 1.2765 and 1.2670, respectively, and from the last level, the technical indicators begin to give oversold signals.

(Click on image to enlarge)

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