FX.co ★ NTFX | GBP/USD

The British Pound (GBP) is struggling against the US Dollar (USD) in early US trading on Thursday, facing resistance at a key psychological level of 1.2500. This comes after a strong rebound in the USD following the release of the first-quarter US GDP report, which revealed a sharper than anticipated rise in inflation. The initial value of the GDP price index jumped to 3.1%, significantly higher than the previous reading of 1.7%. This has fueled expectations that the Federal Reserve will maintain current interest rate levels for a longer period, potentially hindering economic growth. Despite initial forecasts of 2.5% growth, US economic growth actually slowed to 1.6%, falling short of expectations and raising concerns about the American economy's future. Despite these concerns, the GBP/USD pair has shown some signs of life, bouncing towards the crucial resistance level of 1.2500. This rebound follows a period of sharp decline, with the pair finding support near five-month lows at 1.2300. Looking ahead, the short-term outlook for the GBP remains bearish. The 20-day Exponential Moving Average (EMA) is currently positioned at 1.2509, indicating a downward trend. While the 14-period Relative Strength Index (RSI) has risen above 40.00, suggesting a potential easing of downward pressure, the overall trend remains negative. This negative trend stems from a recent breakout of the GBP/USD pair from a range-bound structure established in November. Despite a temporary surge above the 200-day Simple Moving Average (SMA), the pair quickly reversed course, with gains capped by the 50-day SMA. If the current upward momentum persists, the pair could potentially surpass the 50-day moving average and challenge resistance at 1.2682. Further upside could see the pair test December's resistance level of 1.2793, followed by potential hurdles at 1.2826 and 1.2892, the 2024 peak. On the downside, a reversal could lead to a test of March-April support at 1.2574, which coincides with the 200-day moving average. A breach of this level could expose the April low of 1.2538, followed by the critical 2024 low at 1.2517.

In simpler terms, the GBP/USD pair has been stuck in a sideways trading pattern defined by the 50-day and 200-day moving averages over the past few sessions. A breakout from this range is essential for any significant improvement in the technical outlook for the GBP.