GBP/USD: Recovery Momentum Amidst Technical and Fund. Factors

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The GBP/USD pair has shown signs of gaining traction during the early European session on Wednesday, surpassing the 1.2460 mark after experiencing a rebound around the 50% Fibonacci level. Despite previous forecasts suggesting a potential deeper reversal around the 61.8% and 78.6% Fibonacci levels, recent price action, in line with EUR/USD movements, indicates a potential bullish impulse. However, it's essential to note that our analysis serves as an idea rather than a call for immediate entry into trades.

Looking at the near-term technical outlook, there's a discernible buildup of recovery momentum. Nonetheless, the pair could encounter significant resistance around the 1.2625 level, where the Local Point of Control (POC) of volume from the previous range consolidation area resides. Our perspective revolves around the possibility of a retracement near the POC line followed by a subsequent push downward.

Turning to economic news, the UK's Office for National Statistics (ONS) recently released data indicating that inflation, as measured by the Consumer Price Index (CPI), dipped to 3.2% in March from the previous month's 3.4%, surpassing market expectations of 3.1%. Moreover, the core CPI, which excludes volatile food and energy prices, rose by 4.2% during the same period, slightly above analysts' estimates of 4.1%. These readings prompted a strengthening of the Pound Sterling against its counterparts.

Meanwhile, the US Dollar continues to grapple with tepid demand, contributing to the upward momentum of GBP/USD as market sentiment improves midweek. This dynamic underscores the interplay between technical and fundamental factors shaping currency movements.

In conclusion, the GBP/USD pair exhibits signs of recovery momentum amidst a backdrop of technical indicators and fundamental data. While recent price action suggests a potential bullish impulse, resistance levels loom overhead, warranting caution for traders. The release of economic data, particularly inflation figures, has influenced market sentiment, driving movements in the Pound Sterling. Against the backdrop of a subdued US Dollar, GBP/USD dynamics remain dynamic, requiring traders to remain vigilant and adaptable to evolving market conditions.