Where Is GBP/USD Left After the GDP and Employment Numbers?

The GBP/USD charts show that this currency pair moved above 1.26, and it is showing an upward direction. If this upward trend continues today, we could anticipate the rate to test the level of $1.26. Yesterday this pair experienced a rally as the bullish momentum continued after the bounce off the 200 SMA (purple) on the daily chart. The price surged from a low of 1.2495 to a high of 1.2624.

Traders are showing support for GBP/USD as central banks divergence with the FED expected to pause rate hikes today while the Babk of England might keep it going for a while longer, which has contributed to the strength of the GBP. Yesterday’s US inflation numbers further solidified the belief that the Federal Reserve is likely to alter its course. This divergence in central bank policies is driving market sentiment and influencing the GBP/USD exchange rate. Earlier today we had the GDP report from the UK which showed a return to growth in April after the UK economy stagnated in February and contracted in March.

UK April GDP Report

• April GDP MoM +0.2% vs +0.2% expected
• March GDP MoM was -0.3%
• GDP YoY +0.5% vs +0.5% expected
• Prior GDP YoY was+0.3%

The services sector was the main contributor for the growth on the month, accounting for +0.26% while both the production and construction sectors fell showed a -0.04% performance to monthly GDP. And with the latest improvement in economic activity, UK GDP is now estimated to be 0.3% above its pre-pandemic i.e. February 2020 levels.

GBP/USD Live Chart