The recent data coming out of the United Kingdom has painted a mixed picture of the economy, leading to some turmoil for the Pound Sterling (GBP). According to Scotiabank’s Chief FX Strategist Shaun Osborne, the GBP has been underperforming compared to its core peers.
While UK Retail Sales saw a stronger-than-expected increase of 2.9% in May, indicating a recovery from a sluggish April, the PMI data told a different story. The Manufacturing sector performed slightly better than anticipated with a reading of 51.4, but the Services and Composite data fell below consensus estimates.
As a result, the technical outlook for the Pound has weakened in recent sessions. The GBP closed last week on a bearish note, and the loss of support in the upper 1.26s has left the currency struggling to find its footing. The intraday and daily trend strength oscillators have shown clear signs of deterioration.
Looking ahead, support for the GBP is seen at 1.2580, which represents a 50% retracement of the April/June rebound. Any minor rebounds in the upper 1.26s are likely to face resistance.
It is important to note that the information provided contains forward-looking statements and should not be taken as investment advice. Investing in the financial markets carries risks, and individuals should conduct their own research before making any decisions.
In conclusion, the current situation in the UK, as reflected in the economic data and the performance of the Pound Sterling, is a reminder of the uncertainties that can impact the currency markets. Traders and investors should proceed with caution and stay informed about the latest developments to navigate these turbulent times effectively.