GBP/USD sideways at 1.3035 despite weak UK data

• GBP/USD stabilized at 1.3035 on Monday despite weak UK GDP figures as traders eye upcoming event risk.
• A rise in UK yields relative to their US counterparts is helping to support the pair despite risk-off flows elsewhere.

Weaker-than-expected UK GDP growth figures for February had no lasting impact on the pair. GBP/USD, which continues to trade sideways around the 1.3030 area, with the pair finding support at last week’s lows below 1.3000. Last week’s lows marked the first time the pound had traded below 1.30 since November 2020. GBP/USD’s resistance at the start of the week is somewhat surprising given the drop seen in global equities as a result of the China geopolitical/blockade concerns. Normally, a drop in other risky assets weighs on the British pound.

GBP/USD is likely to find support in a jump in UK domestic yields, which are following their continental counterparts higher, narrowing the US/UK rate spread. Dovish trading conditions may also have something to do with caution ahead of an upcoming flurry of event risk in the UK and US. First, some Fed policymakers are expected to comment later in the session on Monday and it should be a busy week for the Fed to speak from then on.

But the biggest events for GBP/USD traders to monitor this week are the economic data releases. UK employment data is released on Tuesday ahead of the release of US consumer price inflation figures, followed by UK consumer price inflation and producer price inflation figures. from the US on Wednesday. The focus remains on the US with the release of the latest retail sales report on Thursday, ahead of a UK bank holiday on Friday, where trading conditions should be much calmer.

Technical levels