GBP/USD falls 1%, worst weekly decline in 2024
quick look
- The GBP/USD pair fell nearly 1%, recording its biggest weekly loss in 2024.
- A narrow trading range has been observed as the pair fluctuates just below the 1.2750 level.
- Key economic indicators to watch: inflation numbers, PMI, Bank of England decision, and UK retail sales.
The GBP/USD pair recently saw a notable decline of almost 1%, ending the week with its biggest loss of the year. While traders and analysts are watching the currency pair anxiously, the start of the new week sees the GBP/USD pair meandering in a narrow range just below the 1.2750 mark.
Rollercoaster Ride: Analysis of the recent performance of GBP/USD
The currency pair's journey last week was nothing short of a roller coaster ride. First, it peaked at the 1.2893 resistance level on Friday, March 8. Subsequently, the rise in the GBP/USD exchange rate to this high was met with a decline. This was driven by the RSI reaching the overbought threshold at 70. Impacted by unexpectedly strong US inflation data, this bounce took the pair below 1.1750. Despite this setback, the binary's positions above the 50, 100 and 200 day moving averages suggest that it was just a hiccup in a healthy uptrend.
Technical Analysis
In addition, technical analysis supports this perspective. For example, a break below the 50-day moving average (DMA) at 1.2686 could signal a significant trend shift. Moreover, a drop below the 200 DMA at 1.2589 would indicate a bearish phase for GBP/USD. Finally, this week's impending economic data is crucial. These include inflation figures, the Purchasing Managers' Index (PMI), the Bank of England's interest rate decision, and UK retail sales. Together, they are expected to become the main drivers of the British pound's fate.
Next week: Economic events to watch
This week, several key economic indicators are in the spotlight. February's Consumer Price Index (CPI) inflation rate is expected to fall to 3.6% from 4.0% in January, with a monthly increase of 0.6% expected, a rebound from the previous month's decline. These numbers act as a measure of the health of the economy and as critical factors influencing the direction of the GBP/USD pair. The pair's downward correction path depends on these upcoming data points, with important support levels at 1.2675 and 1.2600 under bears' watch.
On the other hand, the pair’s rise depends on crossing the psychological barrier of 1.3000, which requires stability above the resistance level of 1.2830. The economic events unfolding this week are pivotal in guiding the course of the GBP/USD pair, as market participants prepare for a performance limited to narrow ranges, awaiting reactions to the revealed indicators.
As the GBP/USD pair navigates with the flow of market sentiment and economic indicators, the technical landscape provides a map of potential trends. The current bounce within a broader uptrend underscores the resilience of the GBP/USD exchange rate. However, impending economic events have cast a shadow of uncertainty, making predicting the pair's next moves a complex puzzle.
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