GBPUSD – Sterling Fails to Gain Upper Hand despite Dollar’s Weakness

The GBPUSD pair traded range bound across majority of last week consolidating around its 4-month low. This consolidation occurred as the greenback lost is momentum post disappointing macro data released last week. The pair consolidated around 1.35 handle as trading session closed for the week, but Pound bulls have failed to gain upper hand due to lack of any bullish triggers which has left the pair to continue its range bound momentum as trading session opened earlier today. The pair is currently moving around 1.36 handle but the risk of further bearish breakout exists in case US dollar gains strength later this week. Economic Calendar remains light in US, while there is no news or speech scheduled in British calendar today. Bank of England last week failed to raise its interest rates owing to soft macro data release recently and also reduced its inflation and growth forecast for current and next year’s which further reduced any possibility for rate hike later this year which has added pressure to already weak British Pound.

GBPUSD Continues Near Support

With markets still debating the odds of the central bank tightening monetary policy again in the coming months the upside potential of the Pound looks somewhat limited. However Investors continue to remain hopeful that policymakers will still opt to raise interest rates before the end of the year, even in the face of weaker first quarter UK data. Tuesday’s UK unemployment and average weekly earnings figures could provoke significant volatility for the GBP/USD exchange rate. Main focus falls on the latest UK wage growth data, with forecasts pointing towards a slight acceleration from 2.8% to 2.9% on the year.

This could give the BOE greater cause for confidence, as the lackluster nature of domestic wages had been highlighted as a concern in previous meetings. On the other hand, if wage growth fails to pick up further in the three months to March the mood towards the Pound could sour further. Even if the UK labor market continues to show signs of tightening this is unlikely to be enough to boost the GBP/USD exchange rate unless this is accompanied by stronger wages. Expected support and resistance price range are at 1.3500 / 1.3460 and 1.3620 / 1.3665 respectively.