GBP/USD traded in a circular pattern on Wednesday, testing the key level of 1.2700. Both the US and UK are set to release important economic figures later in the week, including GDP updates on both sides of the Atlantic and US PCE inflation data on Friday.
The lack of significant data on Tuesday led to GBP/USD treading water, with investors waiting for new market drivers. The pair hovered around 1.2700, with Wednesday offering limited data to guide market direction.
Looking ahead, Thursday will see the release of the Bank of England’s Financial Stability Report, US Durable Goods Orders, and GDP revisions for the first quarter. Friday will bring the UK’s GDP quarterly revisions and the US Personal Consumption Expenditure Price Index (PCE) inflation data, which is closely monitored by the Federal Reserve.
On a technical note, GBP/USD is struggling to break above the 1.2700 handle, facing resistance at the 200-hour Exponential Moving Average. Upside momentum remains weak, potentially pushing the pair to new lows below 1.2630. Daily candlesticks show congestion near the 50-day EMA, with the pair trading below a supply zone above 1.2800.
In conclusion, the GBP/USD outlook remains uncertain as investors await key economic data releases later in the week. The market sentiment will likely be influenced by the upcoming reports, particularly the US inflation figures, which could impact the timing of a potential rate cut by the Federal Reserve.