GBP/USD Weekly Forecast: Pound Sterling Looks To Extend Upside As US Inflation

The Pound Sterling (GBP) has rebounded against the US Dollar (USD) in recent weeks, driven by a combination of factors including a weakening USD and positive UK economic data. GBP/USD is currently trading near its highest level in seven months, and analysts believe it has the potential to continue its upward trajectory in the coming week.

Weakening USD:

• The US Dollar has been on a downtrend due to concerns about the Federal Reserve's dovish stance on interest rates.
• Fed Chair Jerome Powell has hinted at potential rate cuts later this year, which has weighed on the USD's value.

Positive UK Economic Data:

• The UK economy has shown signs of resilience, with recent data indicating growth in the services sector and a decline in unemployment.
• The UK Spring Budget announced by Finance Minister Jeremey Hunt has also provided some support to the Pound.

Technical Analysis

• GBP/USD has broken out of a symmetrical triangle pattern, indicating a potential move to the upside.
• The pair is trading above its 100-day and 200-day Simple Moving Averages (SMAs), which suggests a bullish trend.
• The Relative Strength Index (RSI) is in overbought territory, indicating that there is still room for further gains.

Upcoming Economic Events

• US Inflation Data: The Consumer Price Index (CPI) inflation data for the US will be released on Tuesday, March 12th. This data will have a significant impact on market expectations for Fed rate cuts.
• UK Labor Market Report: The UK labor market report will be published on Tuesday, March 12th. This report will provide insights into the health of the UK job market and could influence GBP/USD.
• US Retail Sales: The US Retail Sales report will be released on Thursday, March 14th. This data will indicate consumer spending trends in the US.

Market Outlook

• GBP/USD is expected to continue its upward trend in the coming week if US inflation data supports expectations of Fed rate cuts.
• Resistance levels to watch include 1.2828 (December 2023 high), 1.2900 (psychological level), and 1.3000.
• Support levels to watch include 1.2726 (triangle resistance-turned-support), 1.2680 (50-day and 21-day SMAs), and 1.2576 (200-day SMA).

Table: Key Economic Events

List of Market Expectations

• GBP/USD is likely to continue its upward trend in the coming week.
• Resistance levels are expected at 1.2828, 1.2900, and 1.3000.
• Support levels are expected at 1.2726, 1.2680, and 1.2576.