GBPUSD struggles to break major resistance technically and faces tough challenges from three important data releases ahead.

The pound sterling was strong throughout last week but weakened in Monday's trading (15/January). GBP/USD slipped to the 1.2720s, while EUR/GBP moved off its one-month low to the 0.8610s. Many traders chose to avoid the risk-laden Sterling before releasing a series of important data from the UK in the coming days.

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Several experts warn that GBP/USD risks declining this week. The reason is that the Cable duo struggles to break through major technical resistance and faces tough challenges from three important data releases ahead.

The three data in question are Salary data on Tuesday, CPI Inflation on Wednesday, and Retail Sales on Friday. These are all parameters to measure inflationary pressures and the purchasing power of the British people. A lower-than-expected figure will strengthen speculation of a Bank of England (BoE) interest rate cut while pressuring the pound sterling exchange rate.

"GBPUSD has stabilised around the 1.27 level. With a lack of positive catalysts and strong resistance levels around 1.28–1.30, we think the pairing is likely to trade in a tight range with risks skewed to the downside," says Thomas Flury, FX Strategist at UBS.

"Sterling is moving lower amidst generalized risk negativity -GBP remains a high beta play- while markets likely speculate on near-term data risks," said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets. "We would expect average hourly earnings, CPI, and retail spending to all undershoot expectations this week."

Friday's release of UK Gross Domestic Product (GDP) data showed economic growth that exceeded expectations in November 2023. However, some data components revealed the risk of a mild recession in the following months.

The US dollar also faces releasing several high-impact economic reports throughout the week, including retail sales, industrial production, and US jobless claims. US economic expectations have until now been relatively more optimistic than the UK's, so the greenback returned to the green in Monday's trading.