The British pound (GBP) found its footing on Thursday, rising on the heels of generalized US dollar (USD) weakness and a better-than-expected reading on UK retail sales. Nevertheless, GBP/USD eventually traded flatlining around the 1.2950 mark on Friday, with the pair unable to find enough follow-through on the positive driver amid a tentative market mood.
The UK’s February retail sales increased 1% compared to the estimated -0.3%. That followed an upward 1.4% increase in January. Despite that upbeat surprise, investors are reluctant to chase further gains, and a risk-off environment is limiting momentum.
US Dollar Continues To Be Under Pressure Ahead Of Key Inflation Data
The pound also responded this week to President Donald Trump’s auto tariff announcement, which revived fears of a wider US economic slowdown and weighed on the dollar.
All eyes now turn to February’s Personal Consumption Expenditures (PCE) inflation data, which is the Federal Reserve’s preferred inflation measure.
- A hot PCE print (≥0.3%) risks supporting the USD and sending GBP/USD lower.
- A weaker reading (≤0.1%) could drag on the greenback and also bolster further GBP upside.
However , the rise of the pound may face limits without a bounceback in global risk appetite.
Market Movers: GBP The Outperformer Against The YEN, But Weak Against The Other Headline Movers
The British pound has performed better than the Japanese yen but mixed against other majors according to this week’s performance heatmap. Notably:
- +1.05% vs JPY
- +0.77% vs EUR
- +0.22% vs USD
- -0.45% vs CAD
This demonstrates resilience but also indicates investor caution, especially with US inflation data and risk sentiment clouding short-term direction.
Technical Outlook: GBP/USD Support Intact, Target 1.3000
From a technical perspective, GBP/USD retains a neutral-to-bullish bias and is trading above the 100-period SMA on the 4-hour chart.
- The RSI is slightly above 50, which indicates the absence of bearish pressure.
- Imminent supports are seen at 1.2930 (20-day SMA), hereafter 1.2900 (channel support) and 1.2800 (200-day SMA).
- The resistance zones are the psychological 1.3000 mark and then 1.3040, the middle of the current ascending channel.
A break north through 1.3000 would indicate bullish continuation, while a consecutive spill below 1.2900 could shift the momentum to the downside.
FAQs
Why is GBP/USD not rising despite strong UK retail sales?
UK retail sales beat forecasts, but a risk-on market environment coupled with caution in anticipation of US inflation data are keeping the pound from pushing much higher.
How will US PCE inflation data affect GBP/USD?
A strong PCE outcome could lift the US dollar and drag GBP/USD lower, while a weaker than anticipated print could sustain the pound. The market is also sensitive to risk sentiment, which might curtail reaction.
What are the technical levels in GBP/USD?
- Support levels sit at 1.2930, 1.2900, and 1.2800.
- Resistance: 1.3000 & 1.3040
Is the pound strong overall?
While the pound is relatively strong against some currencies such as the yen and euro, it remains in a consolidation phase against the US dollar amid mixed global signals.
Will GBP/USD breakout above 1.3000?
Should US inflation be softer than expected and risk appetite improve, the GBP/USD may test and break above 1.3000, clearing the way toward 1.3040 and beyond.
While GBP/USD is cyclically stable—albeit fragile—above key support, bulls are watching for a potential breakout as markets wait for the US PCE inflation print.
