GBP/USD halts the slide for now

• GBP/USD pumped the brakes on recent declines, but upside remains elusive.
• UK economic data has given Pound bulls little to be bullish about.
• US data, on the other hand, continues to outpace expectations.

GBP/USD managed to plug the leaks and stop its most recent backslide, but potential for a bullish rebound remains tepid at best. The Pound Sterling clawed back a scant sixth of a percent against the Greenback on Thursday, well short of the midweek plunge that saw Cable slump another six-tenths of a percent.

GBP/USD remains off of recent highs by over 3% after a one-sided backslide from its last peak near 1.3450. The pair is once again battling it out near the 1.3000 handle as GBP bidders struggle to find a reason to buy Cable.

UK data has broadly missed the mark this week, with UK Consumer Price Index (CPI) inflation, Producer Price Index (PPI) inflation, and UK labor figures all undershot market forecasts. With UK inflation flopping steeper than many expected, and jobs data failing to hit investor expectations, the Bank of England (BoE) will face increasing pressure from markets to step up the pace of rate cuts.

All that’s left of note on the GBP side of this week’s economic data docket will be Friday’s UK Retail Sales figures. Even here, markets aren’t expecting much in the way of magic, with median market forecasts expecting a -0.3% contraction in September compared to August’s comparatively strong showing of 1.0%.

US data, on the other hands, broadly rewarded Greenback bidders. US Retail Sales grew by 0.4% MoM in September, recovering from August’s 0.1% and beating median market forecasts of a 0.3% print. Retail Sales excluding Automotive spending also thumped forecasts, growing by 0.5% in September compared to the expected 0.1%, and easily vaulting over August’s 0.2% increase.

US Initial Jobless Claims for the week ended October 11 also beat market expectations, coming in at 241K for the week. Investors expected the week’s new jobless claimant count to hold steady at the previous week’s revised 260K.

GBP/USD price forecast

GBP/USD remains under selling pressure as the pair consolidates just above the 1.3000 psychological level, having recently broken below the 50-day Exponential Moving Average (EMA) at 1.3096. This bearish break signals a potential continuation of the downward trend, with the 200-day EMA at 1.2841 serving as a critical support level in the near term. Despite the current mild rebound, bearish sentiment remains dominant, and any recovery could face resistance near the 50-day EMA, now acting as a dynamic resistance point. A failure to reclaim 1.3050 could attract further selling interest.

The Moving Average Convergence Divergence (MACD) indicator is flashing warning signs of deeper downside risk, as both the MACD line and the signal line remain in negative territory. The histogram is showing signs of weakening bearish momentum, but the overall bias remains to the downside. A sustained break below 1.3000 could open the door toward the 1.2900 handle, with a further drop potentially targeting the 200-day EMA. Conversely, any recovery above the 1.3050 level would be needed to invalidate the bearish outlook, with a potential upside target of 1.3150.

GBP/USD daily chart