(MENAFN- Daily Forex)
At the start of this week's trading, the GBP/USD exchange rate rebounded above 1.2920 after reaching a one-year high of over 1.30 last week. The US dollar weakened amid President Joe Biden's decision to withdraw from the 2024 elections. Last week's economic calendar showed that UK retail sales fell by 1.2% in June, more than the expected 0.4% decline, increasing the likelihood of a rate cut in August.
This decline follows slower wage growth and inflation reaching the
bank of England's (BoE) target of 2%. Investors are now focused on upcoming PMI figures, which are expected to show faster expansion in manufacturing and services for July. Additionally, the CBI factory orders measure is expected to reach its highest level in a year.
In the United States, there are growing expectations that the Federal Reserve will cut interest rates in September.
According to electronic trading platforms, the yield on the British 10-year government bond was little changed at a one-week high. According to trading, the yield on the British 10-year government bond reached its highest level in one week at 4.13%, affected by the expectations of the monetary policy of central banks and the news that US President Joe Biden will not run for re-election, and instead endorses Vice President Kamala Harris.
Last week, British retail sales fell by 1.2% in June, more than the expected 0.4% decline, increasing the chances of an interest rate cut in August. This decline in retail sales comes on the heels of slowing wage growth and inflation reaching the Bank of England's 2% target. Now, investors are looking forward to the purchasing managers' indices (PMI), which are expected to show a faster expansion in manufacturing and services for July, and the CBI factory orders gauge is expected to reach a one-year high.
In the United States, there are growing expectations that the Federal Reserve will cut US interest rates in September.
According to Forex trading, the pound reached a high above 1.30 against the US dollar last week, but a pullback in equity markets has halted the rally. This week we will be watching the market's reaction to US political developments for guidance. According to trading, the GBP/USD exchange rate peaked at the 1.3044 resistance level but has since retreated to 1.2912 and appears to be still under short-term pressure.
In last week's forecast, we mentioned that the GBP/USD seemed overbought and needed correction. This has occurred, and the exchange rate appears more balanced as of Monday. Despite the recent pullback, the GBP remains expensive against the USD according to average forecasts from over 30 investment banks, trading above their targets for September and year-end.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Technical forecasts for the GBP/USD pair today:
According to the performance on the daily chart attached and according to recent trades, the GBP/USD price is in a neutral position. As we mentioned before, the psychological resistance of 1.3000 will remain the most important for the bulls' control over the trend. On the other hand, and for the same time period, the support level of 1.2820 will remain a threat to the rebound path to the latter. Technically, the GBP/USD price will remain subject to the policy directions of global central banks and investor sentiment towards risk appetite or not. Finally, we still prefer to sell GBP/USD from every upward level.
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