Pound Sterling Appreciates on Market Sentiment: GBP/USD Tests Critical Resistance as Investors Look to Economic Releases
The Pound Sterling (GBP) has appreciated against the US Dollar (USD), trading at 1.2615 as market sentiment continues to improve. Investor sentiment has improved after President Trump’s moderated approach to tariffs and continued talks of a possible Russia-Ukraine ceasefire. Yet, doubts persist regarding the Federal Reserve’s monetary policy, as the most recent FOMC minutes emphasize ongoing inflation threats from possible tariff effects. The economic outlook for the UK is also uncertain, with Bank of England (BoE) Governor Andrew Bailey indicating weak growth and labor market deceleration. The British pound is capped at 1.2620, with future UK Retail Sales and S&P Global PMI figures set to dictate further price movements. KEY LOOKOUTS • Investors look forward to January’s retail sales report, which will give them an idea of consumer spending patterns and the general health of the UK economy. • The initial UK and US PMI readings for February will reflect economic activity patterns and may determine the short-term direction of the Pound Sterling. • FOMC minutes indicate sustained high interest rates based on inflation threats, which could maintain the US Dollar strong against the Pound Sterling. • The 1.2620 level of resistance and 1.2250 support zone are very important in specifying the next possible breakout or correction in the currency pair. The Pound Sterling’s shift against the US Dollar is dependent on several significant determinants, such as future UK Retail Sales figures and S&P Global PMI reports, due to release and offering new economic activity and consumer confidence insights. As for its counterpart, the Federal Reserve’s recent conservative position regarding interest rates, reflected in the most recent FOMC minutes, emphasizes inflationary pressures fueled by possible US tariff measures. This could keep the US Dollar strong, limiting GBP/USD upside potential. On the technical front, the pair faces resistance at 1.2620, aligned with the 100-day EMA, while key support rests at 1.2250. Market sentiment remains a key driver, with geopolitical developments and risk appetite influencing short-term trends. The Pound Sterling’s action against the US Dollar continues to be guided by UK Retail Sales figures, PMI data, and the Federal Reserve’s interest rate stance. With 1.2620 acting as resistance and 1.2250 as support, geopolitical concerns and market sentiment will dictate the direction of the currency pair. • GBP/USD is trading at 1.2615 as market sentiment picks up pace, boosted by diminishing fears about Trump’s tariff policies and optimism in geopolitics. • Investors look forward to January’s retail sales figures, which will give an indication of consumer expenditure and possible economic recovery. • The UK and US February preliminary PMI figures will be instrumental in determining business activity and economic resilience. • The FOMC minutes indicate sustained high interest rates as a result of inflation fears, which may favor the US Dollar. • UK CPI increased more than expected, but the BoE is still hesitant to cut rates further due to economic weakness. • GBP/USD is resisted at 1.2620 and major support at 1.2250, where it will make its next move. • Market sentiment is influenced by news regarding Trump’s trade policies and continued Russia-Ukraine peace talks. The movement of the Pound Sterling is now being dictated by wider economic and geopolitical events. Investors are following UK Retail Sales figures and S&P Global PMI closely, which will paint a clearer picture of economic activity and consumer confidence. A better-than-anticipated retail performance will indicate strength in the UK economy, while PMI figures will reveal business conditions in the UK and US. Also, recent inflation data have indicated a short-term spike, and as a result, the Bank of England has kept monetary policy tight. Governor Andrew Bailey has already cautioned that growth could be slow, and any additional policy moves will be based on new data. GBP/USD Daily Price Chart TradingView Prepared by ELLYANA On the international front, market sentiment has been better because of a more cautious approach by President Trump on trade policies. Although early fears about tariffs on Chinese imports and other major sectors caused volatility, Trump’s recent statements on a potential trade deal with China have calmed fears. But uncertainty persists as there is no clear plan on tariff implementation. While meanwhile, talks on a possible Russia-Ukraine ceasefire have also fostered a risk-positive sentiment, though Ukraine dismissed any agreement in the absence of its direct participation. As conditions in the world economy and politics change, investors will be careful, keeping an eye on critical events that would affect market stability. TECHNICAL ANALYSIS GBP/USD currency pair is fighting to sustain above the 1.2600 level, and resistance is situated at 1.2620, which is coinciding with the 100-day Exponential Moving Average (EMA). The duo is now oscillating around the 38.2% Fibonacci retracement point, calculated from the September-end high to the January-middle low, which represents a key area for possible breakout or pullback. The 14-day Relative Strength Index (RSI) is barely managing to stay above 60.00, and if it fails to hold above this level, it could signal weakening bullish momentum. On the negative side, major support is at 1.2250, and a fall below this level may initiate further selling pressure. To have a stronger uptrend, GBP/USD must break above the 50% Fibonacci retracement at 1.2767, which would signal a continuation of bullish sentiment. FORECAST The potential for the upside in GBP/USD relies on better market sentiment and major economic data releases. If UK Retail Sales for January and February S&P Global PMI reports surpass predictions, this is likely to be a confidence booster for the UK economy, driving the Pound upward. Favorable change in Brexit developments or better-than-forecasted employment statistics are additional strengths for the currency. Furthermore, if the Federal Reserve is hinting at a softer approach towards interest rates in light of slowing inflation, the US Dollar might depreciate, leaving GBP/USD more space to move upwards. Breaking above the resistance level of 1.2620 might signal more upward gains towards the 1.2767 area, suggesting positive momentum. On the negative, any indication of economic weakness within the UK, for example poor retail sales or a fall
