If you have read our recent articles, FX Weekly Summary If you do, you will see that the pound has struggled to gain any bullish momentum since the UK released shaky labor data and a weaker-than-expected inflation report last week.
Meanwhile, a growing number of traders appear to be pricing in lower prospects for a rate cut at the central bank’s next meeting or two.
With today’s US and UK PMI announcements, will GBP/USD break out of its current consolidation?
GBP/USD 4 hour forex Charts by TradingView
Note that market price directional bias and volatility conditions are usually driven by fundamentals. If you haven’t done your fundi homework on the US dollar and the British pound, check out our economic calendar to stay up to date with daily fundamental news.
If you have done your fundie homework and are biased towards the dollar versus the pound, you may want to consider that GBP/USD may be rejected at the minor psychological handle of 1.2650.
As you can see, this area not only acted as support in late December and early January, but it is also not far from the 100 and 200 SMA on the 4-hour chart, as well as the R1 (1.2680) pivot point line.
A rejection in the 1.2650 area and several subsequent bearish candles opens the possibility for GBP/USD to return to the 1.2530-1.2550 support zone, which marks the 2024 low.
However, if today’s market theme stimulates USD selling or increases demand for GBP, GBP/USD could break through the SMA and R1 resistance levels.
If GBP/USD renews its February highs, a rally to December and January highs in R2 (1.2750) could be considered.
Good luck and good luck trading with this setup!
