This week brings a wave of high-impact economic events that could shape market sentiment across major currencies. Inflation data from Australia and the UK will be closely watched on Wednesday, while Thursday shifts focus to the U.S. with final GDP and weekly unemployment claims. On Friday, UK retail sales and Canadian GDP will be released, followed by the U.S. Core PCE Price Index—the Federal Reserve’s preferred inflation gauge.
Against this macro backdrop, GBPUSD remains in focus, having recently broken out of a downtrend. Technical indicators suggest a constructive outlook, though signs of weakening momentum introduce the potential for short-term pullbacks. Traders will be watching both data and price action for confirmation of the next directional move.
High Impact Economic Events
Wednesday 02:30 am (GMT+2) – Australia: CPI y/y (AUD)
Since bottoming at 1.20987 on January 13, GBPUSD has staged a notable rebound, underpinned by the appearance of a Hammer candlestick, a classic bullish reversal signal. This initial pattern was followed by a “failure swing” formation, where the subsequent trough at 1.21594 held above the prior low, ultimately leading to a breakout above the resistance level at 1.23593. This sequence marked the end of the preceding downtrend and established a bullish structural shift.
Adding to the technical strength, a “Golden Cross” has emerged, with the 20-period Exponential Moving Average (EMA) crossing above the 50-period EMA—typically interpreted as a medium-term bullish confirmation. Momentum indicators reinforce this view: the Momentum Oscillator remains above the 100 level, and the Relative Strength Index (RSI) continues to hold above the neutral 50 mark, both suggesting sustained upside bias.
However, a developing bearish divergence between the Momentum Oscillator and price action warrants caution. This divergence may signal weakening momentum and introduces the possibility of a short-term consolidation or corrective pullback, even as the broader trend remains constructive.
Key Resistance Levels
If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:
1.30135: The first level of resistance is projected at 1.30135, which aligns with a recent daily high marked March 20.
1.30843: The second price target is seen at 1.30843, corresponding to the 161.8% Fibonacci Extension drawn from the low point, 1.20987, to the high point, 1.30135.
1.31139: The third upside target is noted at 1.31139, corresponding to the weekly resistance, R3, calculated using the standard Pivot Points methodology.
1.32038: An additional upside target is determined at 1.32038, reflecting the 261.8% Fibonacci Extension drawn from 1.30135 to 1.28870.
Key Support Levels
If sellers take control of the market, traders may focus on the following four key support levels:
1.28870: The initial support level is seen at 1.28870, representing the peak marked on March 21.
1.27150: The second support level is positioned at 1.27150, aligning with the peak from February 26.
1.25491: The third downside target is noted at 1.25491, corresponding to the daily high marked February 5.
1.24470: An additional downside target is determined at 1.24470, reflecting the 61.8% Fibonacci Retracement drawn from 1.20987 to 1.30135.
Fundamentals
UK private sector output rose to a six-month high in March (Composite PMI: 52.0), driven by a rebound in the services sector (Services PMI: 53.2). In contrast, manufacturing slumped further, with output and new export orders falling to 17- and 18-month lows respectively (Manufacturing PMI: 44.6).
Input cost pressures remained elevated, especially in services, and employment continued to decline. Business optimism stayed subdued, with manufacturers citing US tariffs and weak global demand as key concerns.
On the other hand, according to analysts, the U.S. may be heading toward a period of “stagflation-lite,” with growth slowing and inflation picking up—driven in part by proposed Trump-era tariffs. While conditions are not seen as a repeat of the 1970s, a few economists and Fed officials note rising risks of both higher prices and unemployment. The Fed remains cautious, emphasizing the importance of keeping inflation expectations anchored.
Conclusion
With several key economic releases on the calendar, markets are likely to experience increased volatility throughout the week. GBPUSD continues to show bullish technical signals, but caution is warranted amid signs of weakening momentum and a complex global macro environment. As traders monitor inflation trends, growth data, and central bank signals, the interplay between fundamentals and technicals will be critical in shaping short-term direction. Staying nimble and data-driven will be essential.
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