GBP/USD in focus with UK CPI and BoE coming up

The US dollar staged a slight sell-off following a weaker-than-expected retail sales report, which provided a modest boost to currency pairs like GBP/USD from their earlier lows. Despite this, the GBP/USD has seen little significant movement over the past few weeks. However, it could encounter volatility with the upcoming Bank of England rate decision, UK CPI and retail sales data, and global PMI figures scheduled for release later this week. Additionally, the impending UK general election adds another layer of uncertainty. Consequently, the economic data calendar is heavily focused on UK figures, making GBP/USD a key currency pair to monitor this week.

The GBP/USD's inability to maintain its breakout above the 1.2800 level faced selling pressure in the latter part of last week. This led to the pair breaking below the support at 1.2690, now the key short-term resistance to monitor. The next potential support levels are at 1.2635 and then around the 1.2550 area.

I am watching for a bullish price candle to form near these support levels, which could trigger further technical buying towards the upper end of the recent range.

Written by Fawad Razaqzada, market analyst at FOREX.com
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