Amid Selling Operations With Wea

Today, the currency pair will interact with the announcement of the number of US weekly jobless claims, the reading of the Philadelphia Industrial Index, and the US Existing Home Sales

During the middle of this week’s trading, the GBP/USD witnessed strong selling operations that pushed it towards the support level at 1.2867, breaching the psychological level at 1.3000, which helped the bulls launch towards the resistance level at 1.3140 last week, the highest for the currency pair in 15 months.

Despite the selling operations, a group of factors could make it try to regain the level in the coming days, with some risk, or an opportunity for new highs near the 1.33 resistance, due to a confluence of factors, including a less bleak outlook for the UK and global economies.

The pound had reached its best level against the dollar since April 2022 earlier this week but stumbled when ONS figures on Wednesday indicated that inflation fell more than expected last month and could be on track to meet the Bank’s expectations. However, when easing price pressures is combined with historically high wage growth in the labor market, the result is a form of stimulus for the British economy, which has made some analysts more optimistic about the outlook for sterling.

Commenting on this, Michael Cahill, forex analyst at Goldman Sachs, said, “While it is true that inflation has slowed from an uncomfortable high pace, inflation for basic services remains well above target, even on a sequential basis. So we think the UK is still in a different place than its peers.”

Resilience on the household side of the economy has been demonstrated in recent months by continued real growth or inflation-adjusted growth in the official measure of retail sales, of which the next version will be released on Friday, although this is just the domestic side of the pound-dollar rally.

The pound’s rally was fueled by the US dollar’s collapse, which has fallen significantly recently, as many analysts pointed to growing optimism about the outlook for the US and global economies, especially after US inflation was reported to have eased to 3% for the month. According to analysts, June data puts inflation close to the average target of 2% for the Federal Reserve and may mean the approaching end of the interest rate cycle, which is important for the global economy, especially “emerging markets.”

Some of these have experienced financial instability and other forms of hardship as the dollar soared along with interest rate hikes in the aftermath of last year’s invasion of Ukraine. But economic factors are not necessarily the only driver of the GBP/USD rally, which has built significant momentum in the second quarter, especially since July 06 when US Treasury Secretary Janet Yellen declared from Beijing that “the world is big enough. For the prosperity of our two countries.”

“I think a wide swath of our economies can interact in ways that are unquestionable to both governments. The fact that despite recent tensions, we set a record for bilateral trade in 2022, indicates that there is ample scope for our companies to engage in trade and investment,” she added.

The data has been widely described as an attempt to bridge the geopolitical gap between the world’s two largest economies, but some also seem to have viewed it as something more, perhaps negative for the US dollar.

• According to the performance on the daily chart, the price of the GBP/USD currency pair has stabilized below the 1.3000 level, threatening the bullish outlook.
• The bears’ control over the trend may increase if the recent selling operations increase and move toward the support levels of 1.2855 and 1.2770, respectively.

 From the last level, technical indicators will start giving oversold signals. On the other hand, and for the same time period, the resistance level at 1.3120 will be important to confirm the bulls’ control over the trend and prepare for stronger bullish levels. Today, the currency pair will interact with the announcement of the number of US weekly jobless claims, the reading of the Philadelphia Industrial Index, and the US Existing Home Sales.

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