Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group have offered their insights on the GBP/USD pair, suggesting that its upward trajectory could falter if the pair breaks below the 1.2350 level. This assessment is based on recent market trends and the pair's response to various economic stimuli. The 24-hour view of GBP/USD shows the currency pair entering a consolidation phase. It initially dipped to 1.2377, then rebounded to 1.2455 before easing off and closing almost unchanged at 1.2415, reflecting a minimal increase of 0.01%. This movement suggests a continued consolidative pattern, and the expectation is for the GBP to trade within a range, likely between 1.2375 and 1.2460.
Looking at the next 1-3 weeks, the forecast from two days ago (15 Nov, spot at 1.2490) indicated that GBP/USD is likely to continue advancing. However, for a sustained rise, it must clear the 1.2580 mark decisively. Since this forecast, the GBP has struggled to gain on the upside, indicating a weakening of upward momentum. The key level to watch is 1.2350; a breach below this 'strong support' would signal that the GBP is not advancing further.
Regarding the EUR/GBP cross, it is trading with modest intraday losses around 0.8740, ahead of the upcoming UK Retail Sales data for October. Market participants are keenly awaiting this data, as monthly Retail Sales are expected to increase by 0.3%, with Retail Sales ex-Fuel estimated to climb by 0.04% month-over-month. Weaker-than-expected data could put downward pressure on the GBP against the EUR.
Technical Analysis of EUR/GBP
The EUR/GBP cross maintains a bullish stance, staying above the 50- and 100-hour Exponential Moving Averages (EMAs). The Relative Strength Index (RSI) is also in bullish territory above 50, indicating support for buyers. The first significant resistance level for the cross is near the upper boundary of the Bollinger Band and the high of November 16 at 0.8765. A decisive break above this level could lead to a rally towards the high of May 3 at 0.8835, with the next significant resistance level at the April 25 high of 0.8865.
On the downside, the initial support level is at the 100-hour EMA, around 0.8713. A breach below this level could see the cross drop to the lower Bollinger Band limit at 0.8695. Further declines could find support near the low of November 1 at 0.8682.
In summary, the GBP/USD pair is currently in a consolidation phase, with key levels to watch at 1.2350 for potential downside breaks and 1.2460 for upside resistance. The EUR/GBP cross, on the other hand, exhibits bullish momentum but faces key resistance and support levels that could influence its short-term trajectory, particularly in light of the upcoming UK retail data.
