GBPUSD, EURGBP remain rangebound as GBP faces a defining week

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GBPUSD has slightly declined since its YTD high on July 13th due to price being squeezed between the 50-day moving average at 1.2677 and the 100-day MA around 1.26120. Despite attempting to break positive GDP data last week, GBPUSD couldn't sustain its gains, a trend that seems to be dominating recent market movements.

Looking ahead, we have yet to see a retreat towards the psychological level of 1.2500. This level is likely to develop further as we consolidate within the MAs over time. Let's see what customer sentiment tells us with 56% of traders currently holding long positions.
Key levels to watch:

Support levels:
1.2680
1.2620 (100-day MA)
1.2500

Resistance levels:
1.2700
1.2850
1.3000 (psychological level)

EURGBP despite a slight increase at the end of the year, remains within a consolidation pattern. The downward movement of GBPUSD is evidence that GBP is the main driver behind the initial decline and subsequent consolidation. With their different economic paths and corresponding inflation battles, it is too early to discuss a potential breakthrough. In my humble opinion, UK data this week is unlikely to create a breakthrough for a currency pair that typically has smaller movements compared to GBPUSD.

When EURGBP pushes towards the bottom of the consolidation pattern, significant support is present, which could inspire a short-term recovery. The 50-day MA aligns perfectly with the end point of the consolidation pattern, creating another confluence point, while a break below the range would open up an opportunity to test July's lowest level around 0.8500.