This week, markets are set to react to a series of high-impact economic data releases, particularly from the U.S., Canada, and the UK. Key events include the U.S. JOLTS job openings, CPI, and PPI data, along with unemployment claims, all of which could influence Federal Reserve policy expectations. Additionally, the Bank of Canada's interest rate decision and the UK's GDP report will provide insights into economic growth trajectories and monetary policy directions.
From a technical perspective, GBPUSD has maintained an upward trajectory, advancing over 6.9% from its January low. However, signs of potential exhaustion in bullish momentum raise the possibility of consolidation or a pullback. Market participants will closely monitor upcoming data for confirmation of trends and possible shifts in sentiment.
Overview
This week, markets are set to react to a series of high-impact economic data releases, particularly from the U.S., Canada, and the UK. Key events include the U.S. JOLTS job openings, CPI, and PPI data, along with unemployment claims, all of which could influence Federal Reserve policy expectations. Additionally, the Bank of Canada's interest rate decision and the UK's GDP report will provide insights into economic growth trajectories and monetary policy directions.
From a technical perspective, GBPUSD has maintained an upward trajectory, advancing over 6.9% from its January low. However, signs of potential exhaustion in bullish momentum raise the possibility of consolidation or a pullback. Market participants will closely monitor upcoming data for confirmation of trends and possible shifts in sentiment.
Key Economic Events
Tuesday, 16:00 (GMT+2) - USA: JOLTS Job Openings (USD)
Wednesday 14:30 (GMT+2) - USA: CPI m/m (USD)
Wednesday 15:45 (GMT+2) - Canada: Overnight Rate (CAD)
Thursday 14:30 (GMT+2) - USA: PPI m/m (USD)
Thursday 14:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+2) - UK: GDP m/m (GBP)
Technical Analysis
Since reaching a low of 1.20989 on January 13, GBPUSD has advanced by over 6.9%, forming a series of higher highs and higher lows indicative of a sustained uptrend. The initial reversal was driven by a Hammer candlestick pattern, which pushed prices above the 50-period Exponential Moving Average (EMA), reinforcing bullish sentiment and signaling increased buying interest.
Further confirmation of upward momentum emerged through a failure swing reversal, as the trough at 1.22487 remained above the previous low, followed by a breakout above the 1.25228 peak. Additionally, the Momentum oscillator remains above the 100 baseline, and the Relative Strength Index (RSI) continues to hold above 50, suggesting sustained buying pressure.
However, a negative divergence between the Momentum Oscillator and price action introduces a note of caution, as it may indicate weakening bullish momentum, raising the possibility of consolidation or a corrective pullback in the near term.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
1.30505: The initial resistance is 1.30505, which represents the weekly resistance, R1, calculated using the standard Pivot points methodology.
1.32217: The second price target is identified at 1.32217, corresponding to the 423.6% Fibonacci Extension drawn from 1.27153 to 1.25588.
1.35528: The third target is established at 1.35528, aligning with the 423.6% Fibonacci Extension drawn from the high point, 1.25493 to the low point, 1.23319.
1.34157: An additional price target is estimated at 1.34157, which corresponds to the weekly resistance, R3, calculated using the standard Pivot Points methodology.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
1.28148: The first level of support is identified at 1.28148, representing the weekly Pivot Point, PP, estimated using the standard methodology.
1.26901: The second support level is 1.26901, reflecting the daily high from February 24.
1.25493: The third support level is identified at 1.25493, corresponding to the peak marked February 5.
1.24496: An additional downward target is observed at 1.24496, corresponding to the weekly support, S2, calculated using the standard Pivot Points methodology.
Fundamentals
UK pay growth for new hires slowed to a four-year low in February as businesses cut costs ahead of an impending rise in payroll taxes and the minimum wage. Hiring activity and job postings also declined, signaling a cooling labor market. The £26-billion tax hike set for April, along with economic uncertainty, has left firms cautious. The Bank of England is closely monitoring these trends as it weighs inflation risks and interest rate policy. Meanwhile, expectations for cheaper borrowing costs offer some relief to businesses.
The pound weakened against the dollar on Monday, retreating from last week's gains as market sentiment shifted. The dollar gained slightly amid cautious investor sentiment following U.S. policy moves, including new tariffs and a pause in military aid to Ukraine. Adding to uncertainty, Donald Trump declined to rule out the possibility of a U.S. recession, describing the economy as being in a "transition" period. Meanwhile, the euro continued to strengthen, supported by positive economic data and a recent European Central Bank rate cut. Sterling also declined against the euro as eurozone inflation showed signs of slowing.
Conclusion
With a series of critical economic data releases on the horizon, market volatility is expected to remain elevated. U.S. inflation figures, employment data, and Canada's interest rate decision will be key drivers of sentiment, while the UK's GDP report will provide further clarity on economic conditions.
GBPUSD has maintained its bullish structure but faces potential exhaustion signals, making upcoming data crucial in determining whether the uptrend continues or if a corrective pullback unfolds. Meanwhile, broader fundamentals, including slowing UK pay growth and evolving U.S. trade policies, add further uncertainty to market direction.