GBP British Pound - Struggling Above the 1.20 Mark

The IMF released forecasts last week, predicting that the UK will be the fastest-growing economy among major European economies this year. The IMF raised its economic growth forecast for the UK in 2025 by 0.1 percentage points to 1.6%, ranking third in the G7, behind only the U.S. and Canada.

Data released last Friday showed an unexpected decline in UK retail sales in December, increasing the risk of economic contraction in the fourth quarter and prompting the pound to weaken. The GBP/USD fell below 1.2160, edging closer to the 14-month low of 1.2097 touched last Monday.

From a technical chart perspective, the RSI and stochastic index are still in the process of rebounding, suggesting that the GBP/USD pair may stabilize further. Calculated based on the cumulative decline since December, the retracement levels of 23.6% and 38.2% would be seen at 1.2265 and 1.2370, with extensions to 50% and 61.8% at levels of 1.2455 and 1.2540, respectively. The key focus will be on the 250-day moving average at 1.2770. Support levels continue to be significant around the 1.20 mark. If unexpectedly breached, downward levels could target 1.18 and 1.17.

Forecast range:
Resistance: 1.2265 - 1.2370 - 1.2455 - 1.2540 - 1.2770
Support: 1.2000** - 1.1800 - 1.1700

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