Pound Struggles to Hold Ground as Weak Data and BoE Cut Weigh on Sentiment

Key Takeaways:

*Recent soft economic indicators coupled with the Boe rate cut dampen the Pound Sterling’s strength. 

*Eyes on today’s UK GDP reading. 

Market Summary:

The Pound Sterling remains at elevated levels but is showing signs of fatigue, pressured by a string of disappointing economic indicators. All major PMI readings for May fell below the 50 threshold, pointing to contraction in key sectors. Meanwhile, lackluster labor market data—marked by weak employment changes and a rise in unemployment—have failed to provide any meaningful support for the currency. The Bank of England’s recent 25-basis-point rate cut has further dampened sentiment, reinforcing a dovish monetary outlook.

Investors are now turning their focus to today’s UK GDP release, with expectations for a modest improvement. A stronger-than-expected reading could offer the Pound a short-term boost, while a miss would likely exacerbate the currency’s recent weakness.

Technical Analysis:

EURGBP, H4 

The EUR/GBP remains subdued near the 0.8430 level—its lowest point in recent months—but price action has turned sideways following a sustained downtrend, indicating that bearish momentum may be losing steam. The pair has also dipped into a previously unfilled fair value gap (FVG), increasing the likelihood of a technical rebound from current levels.

Momentum indicators are beginning to reflect a shift in sentiment. The RSI remains below the 50 mark but is showing early signs of recovery after approaching oversold territory. Meanwhile, the MACD has formed a bullish crossover near the bottom, suggesting a potential easing in downside pressure and a possible reversal in the near term.

Resistance Levels: 0.8460, 0.8522

Support Levels: 0.8375, 0.8315