GBPUSD Action Stays Below 1.2670 As Pound’s Rebound Slows Down

Summary:
• The GBPUSD trading pair began to reverse its downtrend last week, but the lack of high-impact data could limit movement on Tuesday.

GBPUSD inched up on Tuesday, gaining 0.03% to trade at 1.2658 in the Asian session. The pair has been trying to break to the upside for the last six trading sessions after three weeks of decline between March 8^th and April 1st.  The pound has been reinvigorated by a better-than-expected British Retail Consortium (BRC) Retail Sales Monitor reading, with the US economy lacking high-impact data on Monday.

The BRC Retail Sales Monitor showed a rise in the value same-store sales by 3.2% in March, exceeding the forecast estimate 1.8%. Furthermore, that was a substantial improvement in from February’s 1.0%, signifying increased consumer spending. Comments from Fed members on Monday did little to help the US dollar strengthen. Minneapolis Fed Bank President Neel Kashkari stated that priority focus should be on tackling inflation. His Chicago counterpart Austan Goolsbee was more upbeat on the performance of the economy, stating that it was on the right growth path.

Elsewhere in the intraday trading, the dollar will get support from US Treasuries, whose yields remain above 4.200% for the benchmark 10-year and 5-year bonds. However, the greenback’s safe haven appeal is diminished currently, with Israel and Hamas reportedly nearing a ceasefire deal. Furthermore, the war rhetoric between Israel and Iran has been muted over the past four days. In the absence of high-impact data from the US and the UK on Tuesday, GBPUSD is likely to trade within narrow margins for much of the day. Having said that, some investors are likely to position themselves for Wednesday’s release of US CPI data.

Technical analysis

GBPUSD faces resistance at 1.2664, and the downside will prevail as long as the sellers keep the price below that level. The pair has support at 1.2648, and a continuation of control by the sellers will likely break the support and potentially test 1.2634. However, a move above 1.2664 will favour control by the buyers, with the upside encountering the first resistance at 1.2675. A move beyond that mark could build momentum to head further up to test 1.2684.