GBP/USD into 1.2215 ahead of UK wage figures

• The GBP/USD caught a much-needed boost on Monday as market sentiment recovers.
• The Pound Sterling remains firmly off last week's highs after markets saw a fresh round of risk flows into the US Dollar.
• Tuesday sees UK wages and US Retail Sales.

The GBP/USD gained on Monday, climbing back into 1.2215 as market risk appetite recovers heading into Tuesday's UK wages and US Retail Sales reading.

UK Average Earnings Excluding Bonuses is expected to hold steady at 7.8% on Tuesday, while the figure with bonuses added in is seen declining from 8.5% to 8.3%.

US Retail Sales due later on Tuesday is forecast to decline from 0.6% to 0.3%, though a solid beat could see markets resume fears of interest rate hikes from the Federal Reserve (Fed) in the future. Inflation has continued to remain a sticking point for the US economy, and despite growth figures easing down, they continue to decline at a much slower pace than investors are hoping for.

With US growth continuing to settle slower than investors forecast, it will keep the Fed pushed off from making any rate cuts much longer than previously anticipated.

GBP/USD Technical Outlook

The Pound Sterling remains firmly bearish despite Monday's rebound, down from last week's swing low into 1.2337 and with price action firmly constrained on the low side of the 200-day Simple Moving Average (SMA) currently parked near 1.2444.

The GBP/USD is up from the last swing low into 1.2037, a seven-month low for the pair, and the pair is down over 7% from 2023's peaks near 1.3144.

GBP/USD Daily Chart

GBP/USD Technical Levels