GBP/USD approaches 1.2500 after US economic data.

• British pound is holding on to weekly gains of 0.24%, awaiting key events in the coming week.
• Sentiment remains bleak, a GBP/USD headwind.
• GBP/USD Price Forecast: Buyers’ failure to recapture 1.2600 could open the door for selling pressure.

GBP is falling for the second day in a row, after hitting a daily high near 1.2560, it has pulled back and is due to retest 1.2500. At 1.2509, GBP/USD falls courtesy of a gloomy market mood, influenced by the ECB preparing to lift rates, albeit “gradually” as ECB President Mrs Lagarde acknowledged. .

Sentiment, rising US Treasury yields and dollar strength weigh on GBP/USD

Additionally, the risk-off climate is keeping high-beta currencies, such as the British pound, under pressure. In the currency space, dollar-led haven pairs are higher, despite a higher reading in jobless claims. Initial jobless claims for the week ending June 4 rose by 229,000, worse than the 210,000 forecast. The report shows that while the labor market remains tight, the data indicates that there has been an uptick in layoffs.

Despite being a negative report, the dollar continues to rise, driven by rising US Treasury yields. The 10-year US Treasury yield rises 2.5 basis points to 3.051%, supporting the USD. The dollar index, which measures the value of the dollar against a basket of six currencies, advances close to 0.50% and returns to above 103,000, last reached on May 23.

On the other hand, the British Prime Minister, Boris Johnson, stated that it is time to cut taxes in the United Kingdom, while announcing a house purchase plan, with the aim of giving people the opportunity to buy a House.

During the week, the consumer price index (CPI) for May in the United States will be published. The expectation of the main figure in annual terms is 8.3%. The so-called core CPI, which excludes food and energy, is forecast at 5.9% y/y. In addition, the University of Michigan’s report on consumer sentiment will shed some light on how households feel about the US economy, along with inflation expectations for five years.

GBP/USD Price Forecast: Technical Outlook

The GBP/USD daily chart shows that the pair remains under downward pressure, although it is consolidating in a wide range of 1.2450-1.2600. The daily moving averages (DMA) remain above the exchange rate and accelerate to the downside. It is worth noting that the Relative Strength Index (RSI), has moved into positive territory, although lately it has returned below the mid-50 line, which has aggravated the decline of GBP/USD in the last two days.

Therefore, the GBP/USD bias favors the sellers. The first GBP/USD support would be the 1.2500 figure. A break of the latter would send the pair to challenge the June 7 low at 1.2430. Once surpassed, the next demand level would be the daily low of May 17 at 1.2313, followed by the low of the year at 1.2155.

Technical levels