Pound Remain Steady Despite Weak Data

Fundamental Analysis

* Unyielding Pound: The pound sterling holds its ground against the dollar despite the release of weak UK data, as a drop in the dollar mitigates the impact of the negative figures. Earlier, the currency pair was under considerable pressure following a sharp decline in UK Retail Sales for April. The ONS data indicated a faster-than-expected monthly decline of 2.3% in Retail Sales. Investors had anticipated a 0.4% decline from the previous reading of -0.2%, which was revised downward from a flat performance. However, the weakening dollar provided support for the sterling as concerns arose that the progress in reducing US inflation toward the 2% target had stalled. FOMC minutes from the May meeting, released on Wednesday, indicated that the recent disappointing inflation data has shaken the confidence needed to consider rate cuts.

Technical Analysis

* Technical Breakout: GBPUSD was traded higher following prior rebound from the support level 1.26850. MACD which illustrate diminishing bearish momentum signal with the starting formation of golden cross suggest the pair to extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.28000. Conversely, a potential trend continuation may also be expected and the price could head back towards 1.26850.

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Potential Risks

Moving ahead, the market will keenly observe upcoming UK data to assess the direction of the Bank of England in terms of rate cuts. Additionally, investors will closely focus data from the U.S. and also the Federal Reserve, which could further impact the dynamics of the GBP/USD pair. The interplay between UK economic performance and U.S. monetary policy will be crucial in determining the future trajectory of the pound against the dollar.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.