During the European trading session, the GBP/USD pair remained steady above the 1.2600 support level. At the moment, it appears that the GBP/USD is struggling to stage a bullish rally amid the strength in the USD.
Furthermore, the market is also very cautious right now which is preventing the money inflow towards the Great British Pound. Looking ahead, the next direction of the GBP/USD will depend on the Fedspeak that is scheduled in the next few days.
1.26000 - An Important Level For GBP/USD
If we look at the GBP/USD technicals, it appears to be trading in the upper half of the regression channel. That's a bullish signal, and there's no doubt about it!
But when we look at the RSI, it is hovering around the 70 level which is an indication that technical correction might be on the cards.
So if the GBP/USD pair slides below 1.2625 and turns it into resistance, the next level will be 1.2600, followed by the 1.2550 support level. The 1.2550 level also coincides with the 50 SMA and the lower edge of the ascending channel.
On the other hand, a break of the 1.2650 resistance level means the GBP/USD bulls will target the 1.2700 level. That level is the upper limit of the bullish channel and, over time, will also go higher.
If we look at the fundamental side, the USD will remain the centre of focus due to the upcoming CPI release. The market is expecting the report to show steady inflation in the country.
Similarly, the BoE is also expected to keep its current policy of high-interest rates amid higher inflation and labour shortages in the country. That's why we believe that the UK's inflation will remain in the double-digit territory.
So while we look at the technical aspects of the GBP/USD, let's not forget that the fundamental side also has a lot of interesting things! In fact, the fundamental aspects of the GBP/USD can have a major effect on the pair's next move.