GBPUSD Daily Forecast GBP/USD lost momentum after a second day of weak UK economic data. The latest data showed UK GDP fell by 0.3% in April, compared to expectations of a 0.1% decline. While this negative surprise has dampened expectations for pound bulls, the overall sentiment remains cautiously optimistic. Across the Atlantic, US consumer price index (CPI) data for May came in below expectations, suggesting that inflation pressures have eased. Conflicting economic data from the US and China have once again clouded expectations for monetary policy, with markets reassessing the possibility of further rate cuts from the Federal Reserve (Fed) and the Bank of England (BoE). Against this backdrop, GBP/USD has traded in a relatively narrow range between 1.3450 and 1.3600 over the past 15 sessions. This sideways movement reflects the market’s reluctance to establish a clear direction, largely due to the uncertain macroeconomic outlook and cautious stance surrounding key central bank meetings. The pair is currently trading at the top of its range, suggesting continued upside pressure. However, without a strong catalyst, a clear breakout is unlikely. From a technical perspective, indicators are cautiously bullish despite some indicators. The Stochastic Oscillator recently broke above its trigger line, forming a bullish crossover, which could be interpreted as an early sign of strong upside momentum. The Relative Strength Index (RSI) is showing a slight uptrend, fluctuating between the neutral level of 50 and the overbought level of 70, but has not yet bottomed. On the other hand, the MACD is showing a more cautious behavior. An upward break above the zero line indicates an overall uptrend, while a downward break below the signal line indicates a slight weakening of bullish momentum. These technical indicators suggest that bulls have the upper hand, but their influence could be somewhat weakened if they face a short-term headwind. The bullish outlook is supported by the fact that the GBP/USD pair is above its 50-day, 100-day, and 200-day moving averages. This confirms the strength of the overall uptrend that began in April and continued throughout most of May. These moving averages form a strong dynamic support line, helping to protect the bullish base and limit any potential downside corrections. If bulls take control and drive the pair higher, the next resistance level is the upper Bollinger Band, currently near 1.3630. A break above this level could see the downtrend continue from September 2023 to January 2024, with further resistance at the 123.6% Fibonacci extension at 1.3750. A sustained break above this level could lead to a larger technical breakout, potentially opening up additional upside potential and potentially increasing the likelihood of a move towards the psychological support level of 1.3800, which has been elusive since early 2022. Conversely, if the US dollar gains momentum on positive news such as the US-China rare earths trade deal, the balance of power could shift, leading to a short-term downside for the GBP/USD pair. The first support level is the 20-day moving average, currently at 1.3490. A break above this level could lead to further declines towards 1.3330, where the 50-day moving average intersects the lower Bollinger Band. A combination of these supports could form an intermediate bottom, but a break below this level could see selling accelerate and a larger correction likely. The GBP/USD pair is currently undergoing a technical correction amid macroeconomic uncertainty. Chart patterns and moving averages suggest that the uptrend will continue, but this trend is increasingly influenced by fundamentals. A clear break above the 1.3600 resistance level would signal a resumption of the uptrend and a target that has been reached since 2022, thus reinforcing long-term bullish sentiment. However, investors should be wary of fundamental risks, particularly those related to global trade and central bank policy changes. These risks could push the market lower. The GBP/USD pair is currently in a delicate balance, and the nature of this development could determine the next major trend reversal, whether it is to the upside or downside.
