GBP/USD pushes past 1.2750 as market sentiment attempts a recovery

• Pound Sterling sees a Monday surge as investors try to recover some confidence.
• UK Retail Sales figures due on Tuesday.
• US CPI inflation print to be the pivotal datapoint of the week.

The GBP/USD is bounding higher in a risk-on market session to kick off the new week as broad-market risk appetite steps up in the US market session, pushing the US Dollar (USD) down and giving the rest of the major currencies some breathing room. 

The Pound Sterling (GBP) climbed over the 1.2750 barrier against the Greenback, but a lack of meaningful UK economic data on the calendar this week leaves the Cable at the mercy of broad-market flows as markets gear up for another round of US inflation figures due on Thursday with the release of December’s US Consumer Price Index (CPI).

The UK’s BRC Like-For-Like Retail Sales for the year ended December will print early Tuesday, slated to release at exactly 00:01 GMT. BRC Retail Sales last came in at 2.6% YoY in November, and near-term figures are unlikely to recover much ground, down from 6.5% at the same time last year.

US CPI inflation to draw investor attention

Market focus will be squarely on US inflation figures this week as investors grapple with rate cut expectations from the Federal Reserve (Fed). The big question for 2024 is when, not if, the next rate cut cycle will begin, and traders will be looking for signs of deterioration in the US economic outlook with particular emphasis on hopes for continuing price growth declines. 

Thursday’s US Consumer Price Index (CPI) inflation print is expected to show slight declines in the near-term core figures, but annualized headline inflation continues to prove sticky, with the CPI for the year through December forecast to tick upwards slightly from 3.1% to 3.2%. Core YoY CPI, meanwhile, is forecast to slip from 4% to 3.8%, and December’s MoM Core CPI is expected to hold steady at 0.3%.

GBP/USD Technical Outlook

The GBP/USD has been plagued by rough chop in recent weeks as the Pound Sterling struggles to develop momentum in either direction against the US Dollar. Monday’s US session rally sparked by a risk-on selloff in the USD sees the Cable knocking into near-term technical resistance as frequent intraday turnarounds etch in a barrier from 1.2760 to 1.2780.

Daily candlesticks emphasis the GBP/USD’s drift, but long-term bids remain supported by a bullish crossover of the 50-day and 200-day Simple Moving Averages (SMA) near 1.2550.

The immediate technical ceiling rests at December’s peak bids near 1.2830.

GBP/USD Hourly Chart

GBP/USD Daily Chart

GBP/USD Technical Levels