The Pound Sterling struggled to maintain gains near the 1.2800 level against the US Dollar this week, despite reaching a three-month high close to 1.2820. GBP/USD buyers were looking to push higher as the market awaited the Fed decision.
The Pound Sterling benefited from renewed US Dollar weakness, as concerns about the US economy prompted expectations of a Fed interest rate cut in September. This sentiment was fueled by disappointing US economic data, including a drop in the ISM Manufacturing PMI index and a decline in job openings.
The UK side of the equation remained relatively quiet, with no major economic data releases or public appearances from Bank of England policymakers due to the upcoming UK general elections on July 4. This lack of news helped support the Pound Sterling at higher levels against the US Dollar.
However, on Friday, traders turned cautious ahead of the US Nonfarm Payrolls data, which exceeded expectations and boosted the USD. As a result, GBP/USD declined towards 1.2700 by the end of the week.
Looking ahead, the focus will shift to key US inflation data and the Fed policy announcements. Additionally, UK employment and GDP reports will be closely watched. Technical analysis shows that GBP/USD needs to close above 1.2800 to sustain an uptrend, with resistance levels at 1.2894 and 1.2950. On the downside, support is seen at 1.2712 and 1.2640.
Overall, the Pound Sterling’s performance against the US Dollar will continue to be influenced by economic data releases and central bank policy outlooks in the coming week.