- At the end of last week's trading, the GBP/USD exchange rate stopped its sharp losses, which reached the support level of 1.2763, with an attempt to rebound upwards.
- However, the attempt did not exceed the level of 1.2888, before closing trading around the level of 1.2845. The performance came after data indicated that the US Federal Reserve (Fed) is close to reaching its inflation target and that consumer spending continues to outpace income growth in the US on the back of an apparently bright picture in Europe.
- Overall, US dollar exchange rates were a mixed bunch of performance on Friday, while G20 currencies were topped by the pound sterling, along with the Mexican peso and the South African rand, after the Fed's preferred measure of inflation rose toward its June target.
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According to the advertiser, the closely watched core PCE price index fell from 4.6% to 4.1%, more than the 4.2% expected by economists. The overall PCE inflation rate mimicked the official measure at 3% in response to declines in the costs of food and energy.
Meanwhile, employment costs rose 1 percent in the second quarter and less than economists' expectations of 1.1 percent after falling from 1.2 percent in the first quarter, with both figures doing little to address the question of whether or not the Fed. The US interest rate will be raised again in September.
The data came against a mixed background for stock markets, including in Europe, where the data was brighter in France and Spain, but to a lesser extent in Germany, after economic growth came at zero for the second quarter and was revised downward for the previous period, while inflation fell from 6.4% to 6.2%. Analysts said Friday's data fits the call that the ECB will not raise interest rates much more, but also the likelihood that the ECB will keep interest rates on hold now is about the same.
However, better data came from France and Spain on Friday as economic growth and consumer spending jumped in France in the most recent quarter. Meanwhile, Spanish economic growth eased only slightly to 0.4% in Spain but with inflation rising from 1.7% to 2.4% back above the 2% target.
There was no notable economic data in Britain on Friday although the Confederation of British Industry's index of sales made at retailers and wholesalers on Thursday fell to its lowest level since April 2022 and shortly after the start of Russia's invasion of Ukraine. Before that, S&P Global surveys indicated that the deep recession pushed one measure of combined activity in the manufacturing industry to its lowest level since the beginning of the Corona virus epidemic while pushing the same measure of activity in the services sector to its weakest level since January this year. GBP crosses are broadly higher, meanwhile, and although the exact driver is unclear, it is possible that the outperformance reflects the speculative market's outbidding, as positions recently reached their highest levels before the 2008 financial crisis.
GBP/USD Technical Outlook
According to the performance on the daily chart below, the price of the GBP/USD currency pair is trying to halt its losses, and this will not actually happen without the stability of the currency pair returning above the psychological resistance of 1.3000 again. On the other hand, and for the same period of time, the continuation of the current bearish correction will collide with the support levels at 1.2755 and 1.2680, respectively. With the last level, if it occurs, the technical indicators will move towards strong oversold levels. The British pound may remain around its current performance until the markets and investors react to the Bank of England's policy decisions and the US job numbers this week.
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