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GBPUSD Forecast: The Pound Holds Off the Dollar Ahead of Key US Data Releases

GBPUSD faces rejection at the 1.2670 level in the early Thursday morning London session. The trading pair is currently bearish-leaning, in the absence of high-impact data from the UK. Furthermore, the market has chosen to ignore the 0.1% divergence between the US GDP reading for Q4 of 2023 and the forecast figure. The cable traded at 1.2659 at the time of writing, having shed -0.02% of its value.

The market ignored Wednesday’s US GDP release, and chose instead to bet on a positive Personal Consumption Expenditure (PCE) Price Index reading. The Core PCE Prices reading rose by 1.8% in January, beating the projected 1.7% and setting the stage for a possible rice the PCE Price Index figure set for release on Thursday.

 The pound’s five-day winning streak ended on Wednesday, and the absence of high impact UK data on Thursday could see consecutive daily wins by the US dollar for the first time since February 14th. The market has generally adopted a risk-off approach towards the GDPUSD trading pair. This will likely favour the dollar, especially in view of US Treasury yields, which have recovered and made a return above 4.300% on the 10 and 5-year bonds.

GBPUSD trading pair could yet get some support from positive sentiment around the housing market. Mortgage approvals in the UK rose higher than expected to 55.23k in January. In addition, the BoE Consumer Credit figure beat the forecast 1.600 billion to hit 1.877 billion. These could ultimately boost consumer spending and boost a UK economy that fell into a technical recession last quarter.

The US dollar will get its turn in the housing market spotlight when the January Home Sales data comes out later on Thursday. However, this will likely be subdued by the US Initial Jobless Claims data and Chicago PMI reading for February.

Technical analysis

The Relative Strength Index on GBPUSD signals control by the bulls at the 1.2640 pivot. This will likely propel the pair to the 1.2680 resistance mark. Continued control by the buyers at that level could see them break the resistance and target 1.2695.  Alternatively, the bullish momentum could dissipate and drive GBPUSD below 1.2640, with the support at 1.2620. A breach of that mark will invalidate the bullish narrative and move the target lower to 1.2600.