GBP/USDLast week, the Pound Sterling (GBP) and the US Dollar (USD) exchanged minor gains, with the GBPUSD pair surpassing 1.2750 for the first time in two months.
Notwithstanding its robust commencement to the week, the Pound Sterling encountered challenges in the face of a resurging US Dollar, ultimately accumulating moderate gains and perpetuating the preceding week's ascent.
The central theme of this week was the diminishing anticipation of interest rate cuts by the Federal Reserve (Fed) and the Bank of England (BoE). This was partially mitigated by renewed demand for the US Dollar, which tempered optimism surrounding the British Pound.
As expectations of a June rate cut by the BoE were dampened by the delayed decline in UK inflation, GBPUSD reached a two-month high of 1.2762. In contrast, cautious remarks from Fed officials and ardent sentiments expressed in the minutes of the May Fed meeting countered expectations of aggressive rate cuts, reviving demand for the US Dollar and instigating a decline in the GBPUSD pair.
In April, the ONS reported a monthly decline in retail sales of 2.3%, compared to expectations of -0.4% and March's -0.2%. Notwithstanding this, the Pound Sterling managed to maintain its value above 1.2700, as the USD was unable to sustain its strength heading into the weekend due to improving risk sentiment.
In the daily chart of GBP/USD, the recent price showed a buying pressure above the dynamic 20-day EMA line. Moreover, the rising RSI line above the 50.00 level with a confluence of bullish pressure from the 100 day SMA could extend the gain towards the 1.2828 resistance level.
However, a failure to break this line with a daily close below the 20 DMA could initiate a downside correction.
