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GBP/USD closed last week on the defensive below 1.3400, paring weekly gains despite a mildly positive data surprise from the UK. The release of UK GDP m/m showed modest growth, but the data failed to trigger sustained buying interest in sterling.

Markets mainly interpreted the improvement as technical rather than structural, which aligns with the assumption that UK growth is sluggish when money is tight. GBP bulls were uncertain; therefore, the rising momentum faded.

The dollar has better fundamentals in the US. Producer Price Index, Retail Sales, and Initial Jobless Claims all exceeded expectations, indicating a healthy US economy. These disclosures lowered expectations that the Fed would cut rates soon, raising Treasury yields and strengthening the dollar.

A defensive bid for the dollar followed increased geopolitical concerns over Iran, which made people less risk-taking. This accelerated GBP/USD’s decline at week’s end.

GBP/USD Key Events Next Week

The next week will be full of important UK data releases that could set the pound’s course in the near future. The Claimant Count numbers will give us an idea of how the job market is doing, and the Retail Sales and CPI numbers will be crucial for setting expectations for Bank of England rates. Markets will pay close attention to inflation data, especially for signs that prices are easing. Flash PMIs will give us a timely snapshot of business activity in key sectors later this week.

On the US side, investors are now looking at GDP, Core PCE, and Flash PMIs. The Fed still likes Core PCE as an inflation measure, and an unexpected rise could support the view that prices will remain high for a long time. GDP data will help us determine whether the recent strength is widespread or is slowing.

In general, GBP/USD is sliding lower unless UK data clearly beats expectations and US inflation signals weaken. The dollar is still in charge for now, especially given the world’s greater uncertainty.

GBP/USD Weekly Technical Forecast: Make or Break at 100-MA

(Click on image to enlarge)

GBP/USD daily chart

GBP/USD is consolidating after a rejection from the 1.3550-1.3600 resistance zone, suggesting bullish momentum is fading. The price is below both the 20- and 50-day MA, which are flattening. This supports a neutral to mildly bearish bias. RSI is moving toward the middle line, indicating the market is consolidating rather than continuing its trend.

The 100-day MA near 1.3360 is a key support level. If the market closes below this level every day, it will open up to 1.3250-1.3200. On the upside, 1.3450-1.3500 is immediate resistance, followed by 1.3600. If the price breaks through this level, it will gain momentum toward 1.3750.

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