The British pound first attempted to surge during the week, testing 1.23 before another pullback.
GBP-USD Weekly Tech Analysis
The British pound saw brief rallies over the week, revealing signals of revival. Hovers, like last week, buyers were nowhere to be seen, translating to a drop to 1.23.
Such narratives opened the chances of the market hovering at the 1.20 mark. Remember, 1.20 will draw massive attention, and breaking beneath it will mean a possible drop to 1.18.
If turnarounds appear to support a break beyond the shackles of the previous few weeks will mean a bullish signal. That might send GBP to 1.25. Meanwhile, this level might produce psychological resistance plus a historical flow.
Precisely, that level would see substantial market memory. Nevertheless, the market will likely remain negative, and the fading near-term rallies have been logical.
On the long-term front, it could be somewhat challenging to trust the trade since we remain stretched downward. It seems like we will witness a ranging market in the near term.
That means long-term investors will be more pessimistic. However, they might need a bounce to enjoy a better risk-reward ratio on any emerging setup. That would be ideal upon moves toward 1.25.
The economic stance will unlikely appear any better in the coming week amidst the upcoming data on jobs, inflation, retail sales, and wages. Though the labor market remains sturdy at the moment, the United Kingdom inflation remains primed to double-digits next week.
The BOE (Bank of England) already cautioned that inflation might touch 13% in 2022 as the economy dips into the five recession quarters.
With the United Kingdom battling drought-driven heatwave, political vacuum, and skyrocketing energy prices, more deteriorated economic updates will mean turmoil to already disgruntled citizens.
Sterling still encounters challenges and will likely struggle against other currencies. The GBP/USD tests 1.2100, and breaking beneath it would mean exploring sub-1.2000.
According to the daily chart, the pair continued to form lower highs as the CCI points lower. The 20 and 50-day SMAs remain on the move, and a break & open beneath the two indicators would mean more pessimism for the pair.