GBPUSD is trying to stabilize after four days of high volatility the previous week between 1.31 and 1.3250. British pound boosted the last month from an improvement in the Bank of England forecasts for the UK economy and better than expected economic data. Retail sales in July climbed 3.6% beating the estimates. Consumer price index came in at 0.4%, in July well above the expectations of 0.1%.
USD is under pressure the last two months as investors shift their attention to more risky assets, on speculation of a new relief package from the Trump administration. The rising number of new cases in the USA halted economic recovery after the lockdown.
Despite the recent rebound, British pound continues to face downside risks. United Kingdom national debt has skyrocketed, reaching two trillion as the government continues the borrowing to support the Furlough scheme which expires in October. Meanwhile, the seventh round of Brexit negotiations finished without any agreement.
Two key issues need to be agreed, the UK is refusing to allow the EU access to UK fishing waters and denies signing up the EU’s demand for a “level playing field”. Trade talks will restart in September but the time is running out, and the uncertainty might pressure the pound.
GBPUSD Technical Analysis
GBPUSD is 0.17% higher at 1.3113, in a quiet session as traders digest the recent volatile action in the pair. Last week volatile sessions ended the recent rally, and the consolidation phase around 1.32 might continue.
Bullish traders would face the resistance at 1.3118, the daily top, while the high from Friday’s session at 1.3262 would provide the next obstacle for the pair. In case of a GBPUSD bullish breakout, the next resistance stands at 1.33 round figure.
On the flipside, GBPUSD support would be met at 1.3077 the daily low. More buying interest might emerge at 1.3026 the low from August 13. Next support area is at 1.2951 the low from July 30.