Markets are gearing up for a high-impact week, with a string of key economic data releases set to influence sentiment across major currencies. Inflation figures from the UK, PMI surveys from France, Germany, the UK, and the U.S., along with retail sales data from the UK and Canada, will provide critical insights into the health of leading economies and central bank policy paths.
In the FX space, GBPUSD remains in a bullish technical structure, supported by upward momentum and strong price action. However, with UK inflation surprising to the upside and signs of momentum divergence emerging, traders should stay alert to both breakout opportunities and potential corrective moves as macro data unfolds.
Overview
Markets are gearing up for a high-impact week, with a string of key economic data releases set to influence sentiment across major currencies. Inflation figures from the UK, PMI surveys from France, Germany, the UK, and the U.S., along with retail sales data from the UK and Canada, will provide critical insights into the health of leading economies and central bank policy paths.
In the FX space, GBPUSD remains in a bullish technical structure, supported by upward momentum and strong price action. However, with UK inflation surprising to the upside and signs of momentum divergence emerging, traders should stay alert to both breakout opportunities and potential corrective moves as macro data unfolds.
Key Economic Events
Wednesday 09:00 am (GMT+3) – UK: CPI y/y (GBP)
Thursday 10:15 am (GMT+3) – France: Flash Manufacturing PMI (EUR)
Thursday 10:15 am (GMT+3) – France: Flash Services PMI (EUR)
Thursday 10:30 am (GMT+3) – Germany: Flash Manufacturing PMI (EUR)
Thursday 10:30 am (GMT+3) – Germany: Flash Services PMI (EUR)
Thursday 11:30 am (GMT+3) – UK: Flash Manufacturing PMI (GBP)
Thursday 11:30 am (GMT+3) – UK: Flash Services PMI (GBP)
Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Thursday 16:45 (GMT+3) – USA: Flash Manufacturing PMI (USD)
Thursday 16:45 (GMT+3) – USA: Flash Services PMI (USD)
Friday 09:00 am (GMT+3) – UK: Retail Sales (GBP)
Friday 15:30 (GMT+3) – Canada: Retail Sales m/m (CAD)
Technical Analysis
Since establishing a bottom at 1.27078 on April 7, GBPUSD has been maintaining a well-defined upward trajectory characterized by a sequence of higher highs and higher lows. The initial trend reversal was confirmed by price action decisively closing above the 50-period Exponential Moving Average (EMA) and subsequently the 20-period EMA repositioning the GBPUSD in upward trajectory.
Momentum indicators continue to reinforce the bullish outlook. The Momentum Oscillator remains anchored above the 100 baseline, while the Relative Strength Index (RSI) holds above the neutral 50 mark, both suggesting sustained upward momentum.
That said, a negative divergence emerging between price action and the Momentum Oscillator warrants caution. This divergence could signal a potential near-term correction before the broader bullish trend resumes.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
1.36019: The initial resistance is 1.36019, which aligns with the weekly resistance, R3, estimated using the standard methodology.
1.39315: The second price target is identified at 1.39315, corresponding to the 261.8% Fibonacci Extension drawn from 1.34427 to 1.31393.
1.42341: The third target is established at 1.42341.
1.44211: An additional price target is estimated at 1.44211, which corresponds to the 423.6% Fibonacci Extension drawn from 1.34427 to 1.31393.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
1.32604: The first level of support is identified at 1.32604, representing the weekly Pivot Point, PP, estimated using the standard methodology.
1.31393: The second support level is 1.31393, reflecting the daily low from May 12.
1.30142: The third support level is identified at 1.30142, corresponding to the peak marked March 20.
1.29404: An additional downward target is observed at 1.29404, corresponding to the weekly support, S3, estimated using the standard Pivot Point methodology.
Fundamentals
UK inflation accelerated in April, with the Consumer Prices Index including owner occupiers' housing costs (CPIH) rising 4.1% year-on-year, up from 3.4% in March. The standard CPI also climbed to 3.5% from 2.6% the previous month. On a monthly basis, both CPIH and CPI increased by 1.2%, a sharp rise compared to April 2024.
The main upward pressures came from housing, transport, and recreation costs, partially offset by a fall in clothing and footwear prices. Core inflation also rose, with core CPIH up to 4.5% and core CPI at 3.8%, reflecting persistent price pressures in services and an uptick in goods inflation.
Conclusion
With inflation surprising to the upside and a full slate of PMI and retail data ahead, markets are entering a pivotal stretch that could redefine expectations for growth and monetary policy. GBPUSD remains technically supported by a well-structured uptrend, but signs of negative divergence suggest that bullish momentum may face short-term headwinds. Traders should remain nimble, balancing the prevailing upward bias with heightened sensitivity to incoming data and potential volatility around key event risks.