GBPUSD Above 1.30 As UK Inflation Remains Sticky

GBPUSD has been trading between MAs since November 2023, with the 100 SMA weekly acting as resistance, last week we witnessed a bullish break. In the first half of May, buyers have been in total control, pushing the price almost 4 cents higher, but they stalled just a few pips below 1.30, as we were awaiting the US retail sales and particularly UK inflation figures for June.

The GBP/USD pair declined after struggling at the 100 SMA (red) in mid-June. However, the 50 SMA (yellow) provided support, suggesting a potential rebound by buyers. Indeed, last week saw buyers push the price above the 100 SMA. Despite this, recent UK economic data reveals some underlying weaknesses, with inflation rates showing a downward trend. This has led the Bank of England (BOE) to adopt a more cautious tone, signaling potential concerns about the economic outlook.

GBP/USD Chart Weekly – The 100 SMA Was Broken Last Week

Amidst these developments, the market sentiment surrounding GBP/USD remains uncertain. The declining inflation suggests that the BOE might adopt a more dovish stance, possibly pulling closer any future rate hikes. This shift could exert additional pressure on the pound, especially if economic data continues to disappoint. We are watching for further signals from the BOE soon to gauge the pair’s direction.

UK June CPI Inflation Report

• UK June CPI +2.0% vs +1.9% y/y expected
• Prior +2.0%
• Core CPI +3.5% vs +3.5% y/y expected
• Prior +3.5%

Both the headline and core annual estimates are unchanged compared to May. This comes as services inflation remains sticky, seen at 5.7%, also unchanged on the month. The pound has nudged up from 1.2970 to 1.2985 on the back of this. The report isn’t one to really compel the BOE to move in August, so that will continue to keep markets guessing for now.

GBP/USD Live Chart

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

GBP/USD Price Forecast: $1.32275 Key Support Guarded as Andy Burnham’s Leadership Bid Triggers Fiscal Safeguards

4 weeks ago

Save

Nasdaq at the Crossroads: Can Tech Hold Its Ground After US CPI?

2 months ago

Save

Inflation, Dollar, and Rates: Kevin Warsh’s First Week Sets the Tone

2 months ago

Save