■ GBP/USD maintains upward trajectory for third consecutive session amid dollar weakness
■ Unexpected UK inflation rebound alters BoE rate cut expectations,XRP price prediction supporting sterling
■ Chart patterns indicate bullish potential with key resistance levels in focus
The currency pair continues its gradual ascent during Friday's European session, building on this week's recovery from December lows near 1.2600. Current trading activity shows the pair hovering above psychological resistance at 1.2700, with market participants closely monitoring the 200-hour moving average as a technical reference point.
Wednesday's inflation surprise from the Office for National Statistics revealed the first monthly CPI increase in nearly a year, prompting traders to reconsider their expectations for imminent monetary policy easing from the Bank of England. This fundamental development provides underlying support for the British currency, complementing the current period of dollar softness that's contributing to GBP/USD strength.
However, shifting expectations regarding Federal Reserve policy have led to rising Treasury yields, creating potential headwinds for further sterling appreciation. Market participants appear cautious ahead of the upcoming UK Retail Sales release, with many maintaining neutral positions until clearer directional signals emerge from the economic data.
Technical analysts note the pair's recent ability to defend the 1.2600 support level as potentially significant, with oscillators across multiple timeframes remaining in positive territory. This configuration suggests that bullish momentum may have room to extend, though traders await confirmation through key resistance breaks.
The immediate technical focus remains on the descending trendline drawn from December's peak, currently positioned around 1.2760-65. A convincing breakout above this barrier could open the path toward testing the 1.2800 handle, while failure to overcome this resistance might prompt consolidation or retracement.
On the downside, initial support appears near 1.2630-35, with the 1.2600 level representing a more substantial floor. A decisive break below this psychological threshold could trigger accelerated selling pressure, potentially targeting longer-term moving average support in the mid-1.2500s.
Market participants will closely monitor the UK Retail Sales data for December, due for release at 07:00 GMT, which could provide fresh catalysts for directional moves. The technical landscape suggests traders should prepare for potential volatility around these levels, with risk management remaining paramount in current market conditions.