The Pound Sterling (GBP) is currently trading at 1.3220 against the US Dollar (USD), having retreated from its multi-year highs. Traders are bracing for the release of US inflation data on Friday, which could impact the direction of the GBP/USD pair.
Technical Analysis
The GBP/USD pair has been on a strong uptrend in recent weeks, reaching a two-year peak at 1.3266 following Fed Chair Jerome Powell’s speech. However, the recent retreat suggests that the uptrend may be pausing for a breather.
The Relative Strength Index (RSI) has turned overbought, indicating that the GBP/USD pair is due for a pullback. If the pair breaks below the 1.3200 level, it could signal a more significant correction.
Fundamental Factors
The UK economy is showing signs of resilience, with recent data pointing to stronger growth and a robust labor market. However, the Bank of England (BoE) is expected to raise interest rates further to combat inflation, which could put pressure on the GBP.
On the other hand, the US economy is facing headwinds from higher interest rates and a slowdown in global growth. If the US inflation data on Friday comes in hotter than expected, it could boost the US Dollar and weigh on the GBP/USD pair.
Forecast
In the short term, the GBP/USD pair is likely to remain volatile, with a potential pullback towards the 1.3000 level. However, the longer-term outlook for the Pound Sterling remains positive, supported by the UK’s economic strength and the BoE’s tightening monetary policy.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Investors should do their own research and consult with a financial advisor before making any investment decisions.
