GBP to USD Weekly Forecast: Bulls Eye $1.30 on UK GDP and Wages

Highlights

• In the First Week of July, the GBP to USD gained 1.14% to end the week at $1.28375.
• A busy week ahead will give the bulls a look at $1.30. However, the UK Labour Market Overview and GDP Reports must support a breakout week.
• Mid-week, the US CPI Report could throw a curveball.

It is a big week for the GBP/USD, with economic indicators from the UK and the Bank of England in the spotlight.

The UK Labour Market Overview Report will move the dial on Tuesday. A steady unemployment rate and hotter-than-expected wage growth would keep the BoE under pressure to push interest rates higher.

On Wednesday, the BoE will release the Financial Stability Report ahead of the monthly GDP Report on Thursday. Weak GDP numbers and hawkish BoE bets would fuel recessionary jitters and test buyer appetite.

The BRC Retail Sales Monitor (Tues), NIESR GDP Estimate (Thurs), and the RICS House Price Balance (Thurs) are also out. However, the markets will likely brush aside the housing sector data.

With the economic calendar on the busy side, investors should also consider BoE chatter. BoE Governor Andrew Bailey is on the calendar to speak on Monday and Wednesday.

The US Economic Calendar

It is an important week ahead, with the US CPI Report on Wednesday and the Producer Price Index numbers on Thursday likely to influence Fed bets on a September rate hike.

Last week, service sector data and the US Jobs Report gave the green light for the Fed to raise interest rates by 25 basis points this month. However, the jury is out on a rate hike in September.

Other stats include the weekly jobless claims and Michigan consumer sentiment figures that will need consideration.

After the hotter-than-expected US Jobs Report, investors should also track FOMC member chatter throughout the week. FOMC members Daly, Mester, Bostic, and Kashkari are speaking this week.

GBP/USD Technical Indicators

Daily Chart

The Daily Chart showed the GBP to USD break through the $1.2775 – $1.2800 resistance band on Friday. Looking at the EMAs, the GBP to USD sat above the 50-day ($1.25842) and 200-day ($1.23447) EMAs, signaling bullish momentum over the near and long term.

Notably, the 50-day EMA continued to pull away from the 200-day EMA and reflected a bullish trend.

Looking at the 14-Daily RSI, the 65.81 reading signals a bullish trend, aligned with the 50-day and 200-day EMAs. A GBP to USD hold above the upper level of the $1.2800 – $1.2775 resistance band would support a run at $1.30.

However, UK wage growth and the US CPI Report must be GBP-friendly to support a breakout from $1.2850.

4-Hourly Chart

Looking at the 4-Hourly Chart, the GBP to USD faces strong resistance at the $1.2850 psychological level. After the bullish Friday, the GBP to USD sits above the $1.2775 – $1.2800 resistance band.

Significantly, the GBP to USD also remains above 50-day ($1.27180) and 200-day ($1.26303) EMAs, sending bullish signals. The 50-day EMA pulled further away from the 200-day EMA, signaling a run at $1.30 levels last visited in April 2022.

The GBP to USD must hold above the $1.2800 – $1.2775 resistance band and the 50-day EMA ($1.27180) to target $1.30.

The 14-4H RSI reading of 71.96 indicates a bullish stance, with buying pressure outweighing selling pressure. Significantly, the RSI aligns with the EMAs and signals a possible breakout from $1.2850 to target $1.30.