GBP/USD fell to as low as 1.4078 last week before forming a support there with a bullish engulf price action and recovered since then. A short term bottom is likely formed and some more consolidation trading could be seen this week which makes the outlook on this pair to be slightly neutral. At this point, we’d expect upside to be limited by 38.2% retracement from 1.5239 to 1.4079 at 1.4522 (support turn resistance) and bring fall resumption. Below 1.4079 support will target 1.3503 low next.
In the week ahead, investors will be looking to Wednesday’s Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year.
Markets will also be looking to Thursday’s data on GBP Prelim GDP and Friday’s data on U.S. fourth quarter gross domestic product.