The GBP/USD exchange rate attempted to extend its month-long recovery last week, but was unable to reach a new high. It could now head into a period of neutrality with a bearish bias unless the action-packed economic calendar provides catalyst for new progress. The GBP/USD pair fell to the 1.2050 support level at the beginning of this week’s trading, and the rebound gains last week brought it to the 1.2277 resistance level.
There were multiple signs last week that a significant moderation in US inflation was approaching, albeit not enough to dissuade the Federal Reserve (Fed) from its hawkish policy stance, leading to continued interest rate risks that also limit the factors for the sterling. „The weak inflation reports have caused some understandable relief to risky assets and downward pressure on the dollar,” Michael Cahill, FX analyst at Goldman Sachs, wrote in a research briefing on Friday. “That is likely to extend a bit given the light calendar going forward and the possibility that this week’s FOMC meeting minutes will include some discussion about the FOMC’s apparent desire to slow the pace of advances soon.” But we don’t expect that to be a lasting relief.”