• Retail sales in the US and the UK came in above expectations.

• UK inflation eased more than expected to reach 1.7%.

• The greenback firmed as markets increasingly bet on a Trump win in November.

The GBP/USD weekly forecast shows a neutral bias as the US and UK economies show resilience. The price manages to close above 1.3000 handle.

Ups and downs of GBP/USD

The GBP/USD pair ended the week nearly flat amid economic reports from the UK and the US. Retail sales in both countries exceeded expectations, indicating robust consumer spending. Meanwhile, UK inflation eased more than expected to reach 1.7%, below the Bank of England’s target. Market participants are betting on a rate cut in November.

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Elsewhere, the greenback firmed as markets increasingly bet on a Trump win in November. Such an outcome would likely increase inflation and pause the Fed’s rate-cycle, boosting the dollar.

Next week’s key events for GBP/USD

Next week, the UK will release data on business activity in the manufacturing sector. At the same time, traders will focus on US durable goods orders.

The previous reading revealed that the UK manufacturing sector is in expansion. A better-than-expected reading on Thursday will likely lower the chances of a Bank of England rate cut in November. The opposite is also true.

Meanwhile, inflation in the UK has fallen below the central bank’s target at 1.7%. At the same time, service inflation has fallen. Therefore, policymakers might be more willing to cut rates.

Meanwhile, the US durable goods orders will show the state of demand, impacting Fed rate cut expectations.

GBP/USD technical forecast: Bears active under 1.3051 support

On the technical side, the GBP/USD price is retesting the 1.3051 after recently breaking below. Bears have taken the lead after the price reversed at the 1.3400 key resistance level. A bearish RSI divergence was the first sign of trouble for the previous bullish trend. Soon after, bears breached the 30-SMA support while the RSI dropped below 50, into bearish territory.

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However, the price must now detach from the 1.3051 level to continue the downtrend. Before this happens, bulls might challenge the 22-SMA. A break above the SMA would return GBP/USD to the high at 1.3400. On the other hand, if the SMA holds or the price immediately collapses, bears will target the 1.2701 support level.

https://www.forexcrunch.com/blog/2024/10/20/gbp-usd-weekly-forecast-uk-economy-shows-resilience/