- GBP/USD stays relatively quiet at around 1.3550 early Monday.
- The technical outlook points to a loss of bullish momentum.
- Headlines coming out of the Trump-Zelenskyy meeting could impact the market mood.
After rising more than 0.7% in the previous week, GBP/USD struggles to gain traction on Monday and fluctuates in a tight channel at around 1.3550. Investors will pay close attention to headlines coming out of the meeting between United States (US) President Donald Trump and Ukrainian President Volodymyr Zelenskyy later in the day.
Pound Sterling outperformed its major rivals last week, supported by upbeat macroeconomic data releases. Meanwhile, the US Dollar (USD) failed to find direction as investors assessed cautious comments from Federal Reserve (Fed) officials on policy easing and strong producer inflation data against signs of cooling conditions in the labor market.
The economic calendar will not offer any high-tier data releases on Monday. Hence, market participants could react to changes in risk perception.
Following his meeting with Russian President Vladimir Putin on Friday, US President Trump signalled that Ukraine will need to give up on Crimea and NATO membership if they want to end the war.
“President Zelenskyy of Ukraine can end the war with Russia almost immediately, if he wants to, or he can continue to fight,” Trump said on his Truth Social platform. “No getting back Obama given Crimea…and NO GOING INTO NATO BY UKRAINE. Some things never change!!!”
In case markets turn optimistic about a Russia-Ukraine peace deal following the Trump-Zelenskyy summit, risk flows could dominate the action in financial markets and cause the US Dollar (USD) to weaken. On the other hand, GBP/USD could stay on the back foot if Russia and Ukraine don’t move closer to an agreement.
Later in the week, the UK’s Office for National Statistics (ONS) will publish Consumer Price Index (CPI) data for July, which could influence the Bank of England’s (BoE) policy outlook.
GBP/USD Technical Analysis
GBP/USD closed the last 4-hour candle below the 20-period Simple Moving Average and retreated slightly below the lower limit of the ascending regression channel coming from early August. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart retreated below 60, reflecting a loss of bullish momentum.
On the downside, 1.3540 (Fibonacci 61.8% retracement of the latest downtrend) aligns as the immediate support level before 1.3500 (static level, round level) and 1.3460 (Fibonacci 50% retracement, 200-period SMA).
Looking north, resistance levels could be spotted at 1.3590-1.3600 (static level, round level), 1.3640 (Fibonacci 78.6% retracement) and 1.3700 (static level, round level).
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