GBP/USD ended the week almost unchanged, despite the persistent weakness in the United States Dollar (USD). Renewed Brexit concerns capped the Pound Sterling bulls at a critical daily resistance. The United States and the United Kingdom's central banks' policy announcements will hold the key in the week ahead.

Running into the 1.2450 horizontal resistance for over a week, GBP/USD has entered a phase of consolidation, gathering strength for a sustained break above the latter.

Daily closing above the aforesaid hurdle will validate a Cup and Handle formation, fuelling a fresh uptrend toward the June 2022 high of 1.2599.

Pound Sterling bulls, however, could face stiff resistance at the 1.2500 round figure on the renewed upside.

After the GBP/USD failed to break above/below the weekly range, price action would remain sideways, ahead of central bank decisions, next week. Therefore, the GBP/USD trading range for next Monday to Wednesday before the Fed meeting would likely be 1.2340/1.2430, Oscillators suggest that buying pressure is cooling, with the Relative Strength Index (RSI) aiming down, though at bearish territory. The Rate of Change (RoC) portrays volatility levels as almost unchanged.

The 14-day Relative Strength Index (RSI) continues to hold well above the midline, adding credence to the bullish momentum in the GBP/USD pair.

Failure to take out the powerful resistance at 1.2450 decisively could trigger a sharp correction toward the weekly low of 1.2263. The next stop for bears is envisioned at the ascending 21-Daily Moving Average (DMA) at 1.2219.

The bullish 50 DMA at 1.2163 could be tested as credible support should the correction deepen.

GBPUSD volatile ahead of NFP next week

Jan 27 2023