GBP/USD: Soft Visa consumer spending could cap upside

• Cable sell-off stalled around the 200-day moving average (MA), looks north as per the bullish RSI divergence in 4-hour chart.
• But, the upside could be limited, courtesy of weak consumer spending and caution ahead of monthly UK wages data.

The GBP/USD pair has been sidelined around the 200-day MA for more than a week now, which indicates the sell-off from the April 17 high of 1.4377 may have run out of steam.

The 14-day relative strength index (RSI) is rising from the oversold territory and the 5-day MA and the 10-day MA is beginning to tilt higher in favor of the bulls. Meanwhile, the 4-hour chart shows, the RSI has diverged in the GBP-positive manner. So, a corrective rally could be in the offing.

That said, the upside could be limited, courtesy of the weak UK consumer spending data. Figures from payment card company Visa showed Brits tightening their purse strings in April. Also, the Trades Union Congress (TUC) expects the UK wage growth squeeze to continue until 2025.

Further, traders may prefer to remain on the sidelines ahead of the all-important UK wage growth data, scheduled for release at 08:30 GMT on Tuesday. An above-forecast reading would add credence to the short-term bullish technical set up and could yield a corrective rally.

GBP/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik sees key support at 1.3500, 1.3460 and 1.3420. Meanwhile, resistance is lined up at 1.3590, 1.3620, and 1.3665.