GBP/USD Forecast: UK data hits the Pound

The British Pound was once again the weakest dollar’s rival. GBP/USD traded as low as 1.2479, a one-week low, on the back of UK GDP, which was up by 1.8% MoM in May, below the 5% expected. The number suggests that the economic comeback will be long and painful. The NIESR GDP estimate for the three months to June came in at -21.2%, worse than anticipated, and after printing at -19.1% in the previous month.

Even further, Chancellor of the Exchequer, Rishi Sunak, said: “Today’s figures underline the scale of the challenge we face,” focusing then on the need to protect, support, and create jobs. The country also published its Total Trade Balance, which posted a surplus of £4.3 B in May, after printing at £2.3 B in April, and Industrial Production for the same month, which was up by 6.0% MoM after falling by 20.2% in April. The pair recovered from the mentioned low on the back of dollar’s broad weakness during US trading hours, unable, however, to turn positive for the day.  The UK will publish June inflation figures this Wednesday.

GBP/USD short-term technical outlook

The GBP/USD pair is offering a neutral-to-bearish stance, with the downside limited by the dollar’s weakness. In the 4-hour chart, the pair bounced from a  mildly bullish 100 SMA but remains below a bearish 20 SMA. Technical indicators, in the meantime, lack directional strength within negative levels. Should the pair resume its decline below 1.2520, the most likely scenario is an approach to the 1.2400 price zone.

Support levels: 1.2520 1.2470 1.2420

Resistance levels: 1.2585 1.2635 1.2680

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