GBP/USD Forex Technical Analysis – Consolidating Ahead of Market-Moving Reports including GDP

The British Pound is inching higher against the U.S. Dollar on Monday, shortly before the release of a slew of economic data, including monthly Gross Domestic Product (GDP). The currency is trading inside the previous session’s trading range, which suggests investor indecision and impending volatility.

Sterling jumped against the greenback on Friday, as most major currencies fought back against the dollar’s strength, capping a volatile week in which the British Pound hit a 35-year low, Britain saw a new prime minister, and Queen Elizabeth passed away.

At 04:30 GMT, the GBP/USD is trading 1.1608, up 0.0019 or +0.17%. On Friday, the Invesco CurrencyShares British Pound Sterling Trust ETF (FXB) settled at $111.40, up $0.90 or +0.81%.

UK to Release Key Economic Data

At 06:00 GMT, GBP/USD traders will get the opportunity to react to a multitude of UK economic data including GDP, Construction Output, Goods Trade Balance, Index of Services, Industrial Production and Manufacturing Production.

The UK’s Gross Domestic Product (GDP) July estimate that measures the country’s economic growth will be released on Monday, at 06:00 GMT. Today’s report is expected to show an increase of 0.3%.

In June 2022, its GDP fell by 0.6 percent, consumer-facing services output was 4.9 percent lower, Services fell by 0.5 percent, Production fell by 0.9 percent, on the back of growing weakness among consumer-facing sectors of the economy as the British deal with inflation reaching a 40-year high in the wake of the war in Ukraine. UK GDP dropped 0.1 percent in the April-June period after a rise of 0.8 percent in the first quarter.

In other news, Construction Output, Industrial Production and Manufacturing Production are expected to have risen after posting decline in the previous report.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom on September 7.

A trade through 1.1406 will negate the chart pattern and signal a resumption of the downtrend. A move through 1.1900 will change the main trend to up.

The minor trend is up. This confirms the shift in momentum.

The short-term range is 1.1900 to 1.1406. Its retracement zone at $1.1653 to 1.1711 is potential resistance. Friday’s rally stopped at 1.1648.

On the downside, the nearest support is a minor pivot at 1.1527.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 1.1653 is likely to determine the direction of the GBP/USD early Monday.

Bearish Scenario

A sustained move under 1.1653 will indicate the presence of sellers. Look for the selling to possibly extend into the minor pivot at 1.1527 if this move creates enough downside momentum.

Bullish Scenario

A sustained move over 1.1653 will signal the presence of buyers. This could trigger a surge into the short-term Fibonacci level at 1.1711.

Look for sellers on the first test of 1.1711 since the main trend is down. However, overcoming this level could trigger the start of an acceleration to the upside with 1.1849 the next upside target.