GBP/USD Looks for Direction Amidst Key Economic Data Releases

The GBP/USD pair closed the previous week with minimal changes, hovering above the 1.2600 level after reaching our initial take profit target at 1.26500. As a new week begins, investors brace themselves for crucial inflation data releases from both the US and the UK, leaving the pair in search of direction.

Starting the week with a retracement and a bearish candle, the GBP/USD pair struggles to establish a clear trend. Despite this, the overarching bias for the GBP remains bullish.

The USD faced challenges in gaining strength on Friday due to a risk-positive market environment, resulting in marginal gains for GBP/USD. Notably, the S&P 500 reached a new record high following a revision in the US Bureau of Labor Statistics' monthly Consumer Price Index (CPI) for December, lowering it to 0.2% from 0.3%.

Monday's US economic calendar lacks high-impact data releases. Meanwhile, Bank of England (BoE) Governor Andrew Bailey is scheduled to deliver a lecture at Loughborough University during the American trading hours. Although unlikely to discuss immediate policy outlook, his remarks could influence market sentiment.

Looking ahead, the UK's Office for National Statistics (ONS) will unveil labor market data on Tuesday, followed by CPI and PPI figures on Wednesday. With major data releases looming, market participants may adopt a cautious stance on Monday, complicating GBP/USD's search for direction.

Despite the uncertainties, our outlook leans towards a bullish continuation for the GBP/USD pair.

Above 1.2615 look for further upside with1.2750 as target.

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