GBP/USD shows corrective growth, testing the 1.2600 level for an upward breakout. The pair is recovering from losses at the end of last week, but the market volatility of currency pairs remains low. Traders are analyzing the results of the meetings of the US Federal Reserve and the Bank of England, at which the rate was left unchanged, and still hope that the Federal Reserve can begin a cycle of easing financial conditions to lower the rate in June, whereas the British regulator can do this only by August or later, although the comments of officials of the Central Bank clearly hint at an early rate cut.
Additional pressure on sterling on Friday was exerted by UK macroeconomic statistics. Retail sales volumes turned out to be stable in February, although analysts expected an increase of 0.3% (mom). On an annual basis, the indicator fell by 0.4%. According to a study by the Confederation of British Industry (CBI), manufacturers are increasingly worried about rising product prices as shipping problems in the Red Sea raise oil prices. Nevertheless, experts expect the economic situation to improve in the next quarter. The consumer confidence index from the Gfk Group analytical portal remained at -21.0 in March, while an increase to -19.0 was expected.
On Thursday, March 28, the final statistics on UK GDP for the fourth quarter of 2023 will be published. The national economy is expected to lose 0.3% quarterly and 0.2% year-on-year.
Technical analysis of GBP/USD for today
The indicator of the Bollinger Bands on the daily chart (Daily) is moderately decreasing. The MACD is declining in the negative area and confirms the sell signal. The Stochastic oscillator, which turned up near the 20 mark, indicates a possible corrective growth in the near future.
Long positions can be opened after a confident breakout of the 1.2650 level. The nearest target is 1.2734. We set the stop loss at 1.2600.
A rebound from the 1.2650 level followed by a breakdown below 1.2600 becomes a sell signal with a target at the key 1.2500 level. We will place the stop loss at 1.2650.