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GBP/USD Price Forecast: Holds Near $1.2430 Amid Hawkish Fed and BoE Tensions

The GBP/USD exchange rate remains subdued, trading around 1.2430 in the early Asian trading session on Friday.

GBP/USD Price Chart - Source: Tradingview

The downward pressure is primarily due to a stronger US Dollar, bolstered by recent robust US economic data and hawkish Federal Reserve comments, suggesting a postponement of interest rate reductions until September.

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Impact of Fed’s Hawkish Outlook on Currency Values

Atlanta Fed President Raphael Bostic recently commented on the persistence of high US inflation and indicated a cautious approach towards rate adjustments, possibly delaying any cuts until the end of the year.

Similarly, New York Fed President John Williams underscored the Fed’s reliance on economic data, noting no immediate necessity for rate reductions. This stance has led market participants to anticipate a 66% likelihood of a rate cut by September, as reflected in the CME FedWatch Tool.

Economic Indicators Strengthen USD

Key US economic indicators have also influenced the currency’s strength. Initial Jobless Claims for the week ending April 13 held steady at 212,000, underscoring a stable labour market.

The Philadelphia Fed Manufacturing Index for April exceeded expectations significantly, registering at 15.5 compared to a forecast of 1.5. However, Existing Home Sales in March declined more than expected, falling 4.3% month-on-month to 4.19 million, highlighting some vulnerabilities in the housing market.

BoE’s Cautious Stance Weighs on GBP

Conversely, the British Pound struggles as the Bank of England (BoE) appears to lag in its rate-cutting cycle compared to the Fed. BoE policymaker Megan Greene emphasized the complexity of balancing high inflation with sluggish growth, suggesting that the UK is not close to reducing rates.

Additionally, geopolitical tensions, particularly in the Middle East, could complicate the inflationary landscape, potentially affecting monetary policy decisions.

Upcoming remarks from BoE officials Ramsden and Breeden, alongside data on UK March Retail Sales, are expected to provide further direction for the GBP/USD price forecast.

The market is now looking ahead to more insights from UK economic data and central bank perspectives to gauge the next movements in the GBP/USD exchange rate.

GBP/USD Price Forecast: Technical Outlook

Today’s GBP/USD stands marginally higher at $1.24443, marking a modest uptick of 0.07%. As it hovers just below the critical pivot point at $1.2484, the pair’s near-term trajectory hinges on breaking this level.

Immediate resistance lies at $1.2525, with further barriers at $1.2579 and $1.2617 that could cap any potential rallies. Conversely, the currency pair finds support at $1.2426, with subsequent levels at $1.2388 and $1.2341, which may offer stabilization if bearish pressures intensify.

The Relative Strength Index (RSI) at 50 suggests a neutral market sentiment, while the 50-day Exponential Moving Average (EMA) at $1.2457 is closely aligned with current prices, indicating potential resistance.

GBP/USD Price Chart - Source: Tradingview

Should the GBP/USD sustain above $1.2484, it could shift to a more bullish posture, otherwise, remaining below might encourage a downward trend.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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