GBP/USD Price Analysis – July 14, 2023

GBP/USD's short-term outlook remains positive for now. The next major target for the ongoing rally is projected to be at 1.3095, which corresponds to the 61.8% Fibonacci retracement level of the upswing from 1.0351 to 1.2445.

However, if the price drops below the minor support level at 1.2884, the intraday bias will shift to neutral, and we may witness consolidations before another potential recovery.

The GBP/USD pair is currently consolidating near a 15-month high around the 1.3130 area during the Asian trading session on Friday. The recent substantial gains made over the past couple of weeks have propelled the spot prices to their highest level since April 2022. The fundamental environment continues to favor bullish traders.

The US Dollar (USD) has been facing selling pressure for the past seven consecutive days, reaching a new 15-month low. This is attributed to growing expectations that the Federal Reserve (Fed) is nearing the end of its tightening cycle.

Conversely, the British Pound (GBP) has been supported by increasing speculation that the Bank of England (BoE) may need to raise interest rates further to address significant inflation. These factors are expected to sustain the short-term uptrend of the GBP/USD pair and act as a tailwind.

Following the anticipated 25 basis points rate hike in July, market participants are confident that the US central bank will keep interest rates unchanged for the remainder of the year.

The recent US Consumer Price Index (CPI) report indicated a further decline in consumer prices, reinforcing this view. Additionally, the US Producer Prices Index (PPI) in June showed the weakest annual increase in almost three years.

The softening labor market in the US is also contributing to a more cautious stance from the Fed, which is likely to limit the strength of the USD.

There are no significant economic data releases expected from the UK on Friday, leaving the major markets susceptible to USD price fluctuations.

The preliminary Michigan US Consumer Sentiment Index, scheduled for release later in the early North American session, may influence trading decisions and impact the USD, providing some momentum for the GBP/USD pair on the final trading day of the week.

Overall, spot prices are anticipated to continue their upward trajectory and end the week on a positive note.

GBP/USD Price Chart – Source: Tradingview

GBP/USD - Technical analysis

The GBP/USD pair continues its upward momentum, surpassing our target at 1.3080 and opening the door for further gains.

Our next objective is set at 1.3200, although we should be aware of possible sideways movements influenced by negative stochastic signals. Nevertheless, we expect positive momentum to prevail and drive the price toward our target levels.

It's important to note that a bearish correction could occur if the price drops below the level of 1.31451. This correction would indicate a temporary reversal in the overall bullish trend.

Therefore, while maintaining a predominantly bullish outlook, it is crucial to monitor the price's behavior around the support level at 1.31451. A break below this level may signal a shift toward bearish sentiment.

For today's trading, we anticipate a range between the support level at 1.3070 and the resistance level at 1.3220. Overall, the prevailing trend for the day remains bullish, but caution is advised due to the potential for a bearish correction if the price falls below 1.31451.