Market Analysis
The British Pound (GBP) stabilized during Friday's London session following a recent peak at 1.2700 on Thursday. GBP/USD struggled to sustain upward momentum as attention turned to the upcoming UK Consumer Price Index (CPI) data for April, due next Wednesday.
Investors are closely watching the inflation figures for insights into the Bank of England's (BoE) interest rate strategy. There's uncertainty whether rate cuts will commence in June or August, depending on the CPI outcomes.
April's inflation data is anticipated to heavily influence GBP's direction, with BoE Governor Andrew Bailey suggesting a potential drop in inflation toward the 2% target due to unique factors in the UK's energy pricing system.
Technically, the Pound Sterling is near the 61.8% Fibonacci retracement level around 1.2670, based on the March high near 1.2900 and April low near 1.2300. A clear break above the psychological resistance at 1.2700 could extend GBP/USD's gains. Downside support is seen at the 50-day and 200-day Exponential Moving Averages (EMAs) around 1.2565 and 1.2536 respectively.
The 14-day Relative Strength Index (RSI) has entered bullish territory between 60.00 and 80.00, indicating momentum favoring further upside potential.
Paraphrasing text from "FX Street" all rights reserved by the original author.