The GBP/USD currency pair has been stuck in a sluggish trading range between 1.25 and 1.28 since December. Despite a brief rally in March, the pair quickly reversed, indicating that sellers were in control. Fundamentally, the pair has been driven by fading UK inflation and continued strong US economic growth and inflation data. This has led to broad US dollar strength, weighing heavily on GBP/USD.
After breaking below 1.2500, the pair consolidated around 1.2430, briefly retesting 1.2500. However, the downtrend resumed on Friday, extending the decline to 1.2316. Given the significant range of 300 pips, a further 300-pip break is likely. Despite the recent sharp decline, there is a lack of strong catalysts to drive the pound significantly lower.
Upcoming economic data releases, such as US GDP, PCE, and S&P Global PMIs, will be closely watched for potential market drivers. These indicators provide valuable insights into the relative economic health of the US and the UK, which can influence currency movements. For now, GBP/USD remains under selling pressure, with interim support at 1.2200 and potential downside targets towards 1.2100, retesting the October/November lows.
