GBP/USD falls into familiar lows as Friday looms with key UK data print

• GBP/USD eases back to 1.2650 as Sterling stumbles.
• UK Retail Sales, PMIs to close off the trading week with a bang.
• US PMI figures to add onto week’s data prints, expecting to soften.

GBP/USD is poised for a bumper Friday session. Key UK data is due during the European market session, and US Purchasing Managers Index (PMI) activity surveys set to wrap up the trading week. The Bank of England (BoE) held rates at 5.25% this week, with a stubbornly tepid stance on rate cuts that deflated broad-market rate cut expectations.

Forex Today: All the looks will be on PMI reports

The BoE was widely expected to keep interest rates unchanged in June. However, there was a focus on recent services inflation and a vague aim to keep inflation "sustainably" lower, which has left the value of the Sterling uncertain. Additionally, the BoE expressed a willingness to maintain restrictive policies for as long as necessary and emphasized that although the UK labor market is looser than before, it still remains historically tight.

Read more: BoE maintains policy rate at 5.25% as forecast

A miss in US economic figures softened investor risk appetite on Thursday, headlined by a worse-than-expected print in US Initial Jobless Claims coming in higher than expected for the week ended June 14. Week-on-week unemployment claimants are still lower, printing at 238K versus the previous 243K (revised from 242K), but still came in above the four-week trending average of 242.75K, which itself also rose from the previous 227.25K.

After the BoE voted seven-to-two to keep interest rates on hold at 5.25%, GBP traders will now focus on Friday's upcoming economic data. The scheduled releases include UK Retail Sales and updated S&P Global PMI figures for both the UK and the US. UK retail sales are expected to rebound to 1.5% MoM in May, compared to the previous decline of -2.3%. Additionally, UK PMIs are forecasted to show slight improvements. The Manufacturing PMI is expected to increase to 51.3 from 51.2, and the Services component is anticipated to rise to 53.0 from 52.9.

US Manufacturing and Services PMIs are both forecast to tick lower, with Manufacturing expected to slip to 51.0 from 51.3 and Services sliding to 53.7 from 54.8.

GBP/USD technical outlook

The value of the Pound Sterling dropped below the 1.2700 mark against the US Dollar on Thursday, showing a decline and moving lower towards recent lows at 1.2657. Technical indicators suggest a potential continuation of this bearish trend as the price failed to stay above the 200-hour Exponential Moving Average (EMA) at 1.2721. Further decreases in value are likely if there is no significant upward movement to reverse this trend.

The daily candlestick chart confirms a bearish rejection from a supply zone above the 1.2800 mark, indicating a potential return to the 200-day EMA, which is currently around 1.2580. The technical support provided by the 50-day EMA at 1.2674 is getting weaker, and if bearish pressure continues, GBP/USD could drop back to the 2024 lows around the 1.2300 level.

GBP/USD hourly chart

GBP/USD daily chart