CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• GBP/USD pullbacks from weekly highs, down 0.25%, after testing 1.2700.
• Momentum remains bullish, with potential to test 1.2803 and YTD high at 1.2893.
• Further retracement could challenge support at 1.2634/31 and 50-DMA at 1.2594.

The Pound Sterling erased Wednesday’s gains against the US Dollar as investors pushed the major to new weekly highs on the disinflation evolution in the United States (US). Although investors are pricing 38 basis points rate cuts by the Federal Reserve toward the end of the year, the Greenback is staging a comeback. The GBP/USD trades at 1.2654, down 0.25%.

GBP/USD Price Analysis: Technical outlook

The GBP/USD retreated from weekly highs after briefly testing 1.2700 as buyers failed to decisively crack that level, followed by the April 9 high of 1.2709. Despite that, the uptrend remains intact, with buyers taking a respite.

Momentum, as depicted by the Relative Strength Index (RSI), suggests that bulls are in charge, which could lead to further gains.

If buyers manage to reclaim 1.2709, this could potentially open the door for testing 1.2803, the March 21 high, and even the year-to-date (YTD) high of 1.2893.

On the other hand, a continuation of the retracement witnessed on Thursday could set the scenario to challenge the confluence of the May 3 high and the 100-day moving average (DMA) at around 1.2634/31 before diving toward the 50-DMA at 1.2594.

GBP/USD Price Action – Daily Chart

• GBP/USD gains momentum around 1.2688 amid the weaker USD on Thursday. 
• The US CPI inflation eased to 3.4% YoY in April from 3.5% in March, as estimated. 
• Steady UK wage growth raised fears of persistent inflationary pressures.

The GBP/USD pair extends its upside near 1.2688 on Thursday during the early Asian session. The uptick of the major pair is supported by the weaker Greenback after the release of softer US CPI inflation data. Later in the day, the US Building Permits, Housing Starts, the weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production will be released. Also, the Federal Reserve’s (Fed) Barr, Harker, Mester, and Bostic are set to speak on Thursday. 

Inflation in the United States eased slightly in April. The Consumer Price Index (CPI) rose 3.4% on a yearly basis in April, compared to an increase of 3.5% in March, according to the US Bureau of Labor Statistics (BLS) on Wednesday. The annual core CPI inflation eased to 3.6% YoY in April from 3.8% in the previous reading. Both figures came in line with the estimation. On a monthly basis, the CPI and the core CPI both rose 0.3% MoM in April. The softer inflation data raised the odds for a Federal Reserve (Fed) rate cut in 2024, which drag the US Dollar (USD) lower and create a tailwind for the GBP/USD pair. 

Furthermore, the final reading of Retail Sales showed no change in April from the previous reading of a 3% increase, worse than the market expectation of 0.4%. 

On the GBP’s front, the UK employment data showed job market conditions deteriorated for the third consecutive month as the Unemployment Rate rose. Nonetheless, the Bank of England (BoE) policymakers remain concerned over high service inflation as it could stall progress in the disinflation process. This prompted uncertainty over the BoE interest rate cuts. 

• GBP/USD climbs past 100-DMA, with buyers gaining traction.
• Buying interest remains strong, as RSI points upwards, yet to become overbought.
• Key resistance lies at 1.2670, which would exacerbate followed by 1.2700.
• Sellers target a close below the 100-DMA to challenge 1.2600.

The Pound Sterling advanced some 0.30% and hit a five-week high of 1.2670 following the release of the US Consumer Price Index (CPI). The data was mostly aligned with estimates, showing a continuation of the disinflation process, which weighed on the Greenback. The GBP/USD trades at 1.2641 at the time of writing.

GBP/USD Price Analysis: Technical outlook

The GBP/USD remains neutral to upward bias and hit a weekly high at 1.2670 following a soft US inflation report. However, the pair has retreated toward the 100-day moving average (DMA) at 1.2632, seen as the next key technical level that, once surpassed, could pave the way for further gains.

The Relative Strength Index (RSI) shows that momentum favors buyers. The RSI aims upward with enough room before portraying overbought conditions.

If buyers reclaim the 100-DMA, the next resistance would be today’s high at 1.2670. A breach of the latter will expose the April 9 high at 1.2709, ahead of rallying to the next supply zone at 1.2803, the March 21 high. Once surpassed, the next stop would be the year-to-date (YTD) high at 1.2894.

Conversely, sellers remain hopeful that the GBP/USD exchange rate could tumble below the 100-DMA and achieve a daily close below that level, to challenge 1.2600. Once cleared, the next stop would be the 50-DMa at 1.2591, followed by the 200-DMA at 1.2539.

GBP/USD Price Action – Daily Chart

• GBP/USD takes a breather near 1.2590 in Wednesday’s early Asian session. 
• The US PPI came in line with expectations, rising by 2.2% YoY in April, compared to the 1.8% increase in March. 
• The UK Unemployment Rate rose to 4.3%, and private-sector wage growth slowed. 

The GBP/USD pair consolidates its gains around 1.2590 during the early Asian session on Wednesday. The major pair holds above the key 100-day Exponential Moving Average (EMA) but remains capped under the 1.2600 hurdle. The US Consumer Price Index and Retail Sales report for April will be in the spotlight. Also, the Fed’s Kashkari and Bowman are due to speak.

Wholesale inflation, as measured by the Producer Price Index (PPI), hit its highest rate in a year, the Bureau of Labor Statistics showed Tuesday. The US PPI figure rose 2.2% on a yearly basis in April, compared to the 1.8% increase recorded in March (revised from 2.1%), and came in line with the estimation. The Core PPI, which excludes food and energy costs, climbed 2.4% YoY in the same period, compared to an increase of 2.1% in the previous reading and matching the expectation. On a monthly basis, the PPI and the core PPI both rose 0.5% MoM in April.

The US Federal Reserve (Fed) said on Tuesday that the April PPI provides more justification to keep rates higher for longer, but it does not necessarily mean the Fed will need to hike again. Meanwhile, Cleveland Fed President Loretta Mester stated that she would still like the central bank to start tapering asset purchases this year, adding that the Fed is in a "really good place" to study the economy before charting the rate path. 

Investors await the US CPI inflation data on Wednesday for fresh impetus. The hotter-than-expected inflation reading could dampen hope for a Fed rate cut this year and boost the Greenback against the Pound Sterling (GBP). 

On the other hand, the UK employment reports showed signs of cooling, which prompted the expectation that the Bank of England (BoE) might cut interest rates in the coming months. The ILO Unemployment Rate rose to 4.3% in three months to March from 4.2% in the previous reading, the highest since last summer. While overall wage growth excluding bonuses, remained unchanged at 6.0% in the same reporting period,. The UK Employment Change arrived at -177K in the three months to March, versus a -156K decrease in the previous reading, the UK Office for National Statistics reported on Tuesday. 

The financial markets expect the BoE to cut rates before the Fed as early as June or August. This, in turn, might weigh on the Cable and cap the upside of the GBP/USD pair in the near term. 

 

• GBP/USD holds its position around the major level of 1.2550 due to improved risk sentiment.
• Unemployment Rate (3M) is expected to show an increase in unemployed workers.
• Fed Vice Chair Philip Jefferson has advocated for maintaining current interest rates until signs of inflation easing become apparent.

GBP/USD hovers around 1.2560 during the Asian session on Tuesday following the improved risk appetite. The Pound Sterling (GBP) received support from higher-than-anticipated UK Gross Domestic Product (GDP) figures released on Friday. The UK economy expanded by 0.6% in Q1, surpassing expectations and signaling the end of the country's brief recession. This robust economic rebound represents the strongest growth seen in over two years.

Market participants are now turning their attention to employment data expected later in the day. There are anticipations of an increase in the number of individuals claiming jobless benefits in April, as indicated by the UK Claimant Count Change. Additionally, the ILO Unemployment Rate (3M) is expected to show a rise in the number of unemployed workers in the UK.

The US Dollar Index (DXY), which measures the US Dollar (USD) against six major currencies, advances due to cautious statements from Federal Reserve (Fed) officials. They emphasize the importance of maintaining higher rates for an extended period given the elevated inflation. Fed Vice Chair Philip Jefferson reiterated this stance on Monday, advocating for keeping current interest rates until signs of inflation easing emerge.

The Federal Reserve Bank of New York conducted a consumer sentiment survey, suggesting that US consumers foresee a widespread acceleration in inflation over the next year. Expectations have risen to 3.3%, up from the 3.0% figure reported in March for consumer one-year inflation expectations.

Investors are closely watching the Producer Price Index (PPI) on Tuesday, a pivotal economic indicator. The PPI report could significantly impact the market, serving as a catalyst. Traders may use the PPI data to assess the potential outcome of the Consumer Price Index (CPI). If the PPI data exceeds expectations, it could further strengthen the US Dollar.

• GBP/USD trades sideways around 1.2560 in Tuesday’s early Asian session. 
• Many Fed officials emphasized the need to hold interest rates at current levels until inflation returns to the target. 
• Markets have priced in a 25 bps reduction in August and 50 bps in cuts overall in 2024.

The GBP/USD pair consolidates its gains near 1.2560 on Tuesday during the early Asian session. The weaker US Dollar (USD) amidst the generalized better tone in the appetite for risk-related assets provides some support to the major pair. Investors will closely monitor the UK employment market, the speech by the BoE's  Pill, and US Producer Price Index (PPI) data, due later on Tuesday. 

Several Federal Reserve (Fed) officials emphasized the need to hold rates higher for longer as inflation remains elevated. Fed vice chair Philip Jefferson on Monday became the latest central bank official to call for holding interest rates at current levels until inflation shows more signs of easing. Jefferson said that he will continue to look for additional evidence that inflation is going to return to the 2% target. 

The financial markets have priced in nearly 5% odds of June rate cuts, down from 10%, while the chance of September rate cuts has fallen to 75% from nearly 90% at the start of last week. The cautious approach from Fed officials will likely lift the Greenback in the near term and cap the upside of the pair.  

On the other hand, there is growing speculation that the Bank of England (BoE) will begin to cut the interest rate in the summer, with traders pricing in a 25 basis point (bps) reduction in August and 50 basis points (bps) in cuts overall in 2024. The BoE governor Andrew Bailey said during the press conference that he would monitor the forthcoming data releases before deciding on rate cuts. The UK employment data for April might offer some cues about the economic situation and further monetary policy. A higher-than-expected outcome might weigh on the Pound Sterling (GBP) and create a headwind for the GBP/USD pair. 

• GBP/USD edges higher on soft US Dollar, climbs above 200-DMA.
• If buyers reclaim 1.2600, look for a test of 1.2700 in the near term.
• Once the pair tumbles below 1.2500, look for a drop toward 1.2445 and 1.2299.

The Pound Sterling gains traction against the US Dollar and climbs above the 200-day moving average (DMA) of 1.2541 in early trading during the North American session. At the time of writing, the GBP/USD trades at 1.2566, up by 0.36%.

GBP/USD Price Analysis: Technical outlook

The GBP/USD is currently uncertain, showing a neutral bias. It is unable to decisively continue trending up and push above the May 3 high at 1.2634, the latest cycle high. Once cleared, that could exacerbate a rally toward the April 9 high at 1.2709 before challenging the psychological 1.2800 figure.

On the other hand, a bearish resumption is most likely once sellers’ step in and breach below the 200-DMA and 1.2500. If those two levels are taken out, the next support emerges at 1.2445 the May 9 low, followed by the April 22 low of 1.2299.

GBP/USD Price Action – Daily Chart

• GBP/USD inches higher possibly driven by improved risk appetite on Monday.
• BoE’s Chief Economist Huw Pill indicated a growing belief that rate cuts might be on the horizon.
• The US Dollar struggled as the US Consumer Sentiment Index dropped to 67.4 in May, marking a six-month low.

GBP/USD edges higher to near 1.2520 during the Asian session on Monday, possibly due to improved risk appetite. The Pound Sterling (GBP) was bolstered by releasing higher-than-expected UK Gross Domestic Product (GDP) figures on Friday. The UK economy expanded by 0.6% in Q1, surpassing forecasts and signaling the end of the nation's brief recession. This economic rebound represented the most robust growth seen in over two years.

However, the British Pound faced a challenge following dovish remarks from Huw Pill, Chief Economist at the Bank of England (BoE). Pill echoed the sentiment of the majority of the BoE's Monetary Policy Committee (MPC), who opted to maintain interest rates at 5.25% on Thursday. Yet, he subsequently expressed a growing belief that rate cuts could be imminent.

The market participants are likely to await the employment data from the United Kingdom (UK) on Tuesday with expectations of Claimant Count Change showing an increase in the number of those claiming jobless benefits in April. Additionally, the ILO Unemployment Rate (3M) is expected to show an increase in number of unemployed workers in the UK.

This week, investors in the United States (US) are poised to focus on key economic indicators for potential market drivers, including the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales.

On Friday, the US Dollar (USD) encountered challenges following the release of the University of Michigan consumer sentiment index, which dropped to 67.4 in May from April's 77.2, marking a six-month low and falling short of market expectations of 76 reading.

However, the extent of these losses may have been curbed by an uptick in inflation expectations for the year ahead, with a reading of 3.5%, the highest in six months compared to April's 3.2%. Additionally, the five-year inflation outlook rose to 3.1%, a six-month high, up from 3.0% previously. These inflation indicators might have supported the US Treasury yields to advance, potentially lending support to the Greenback.

• GBP/USD erased its earlier gains as buyers failed to reclaim 200-DMA.
• Deterioration in the US economy spurred flows to USD amid its safe-haven appeal.
•  Momentum remains bearish, as RSI stays below 50, key resistance lie above spot price.

The Pound Sterling weakened against the US Dollar on Friday, even though economic data from the UK was better than expected. Fears that the US economy may slow more sharply than expected as consumer sentiment deteriorates. The GBP/USD trades at 1.2510, down 0.10%.

GBP/USD Price Analysis: Technical outlook

From a technical standpoint, the GBP/USD retracement toward 1.2500 keeps sellers hopeful of lower spot prices. Buying momentum is fading as buyers failed to crack the 200-day moving average (DMA) at 1.2541. That and the Relative Strength Index (RSI) remaining bearish could pave the way for further losses.

For a bearish continuation, sellers must conquer the May 9 low of 1.2445. Once cleared, it would emerge the psychological 1.2400 level, followed by the year-to-date (YTD) low of 1.2299.

On the flip side, if buyers hold GBP/USD’s exchange rate above 1.2500, they could test the 200-DMA, followed by the 50-DMA at 1.2594. the next resistance would be the 100-DMA at 1.2635.

GBP/USD Price Action – Daily Chart

• GBP/USD is gaining ground after the release of higher-than-expected UK GDP data on Friday.
• The Pound Sterling may encounter challenges on a rate cut possibility by the BoE next month.
• US Treasury yields lost ground after the release of weak US Initial Jobless Claims on Thursday.

GBP/USD edged higher to near 1.2540 during Asian hours on Friday, buoyed by the release of higher-than-expected UK Gross Domestic Product (GDP) data for the first quarter. GDP (QoQ) rose by 0.6%, reversing the previous quarter's decline of 0.3%, surpassing expectations of a 0.4% increase. Additionally, GDP (YoY) increased by 0.2%, rebounding from the previous decline of 0.2%.

However, the Pound Sterling (GBP) encountered challenges following the Bank of England’s (BoE) decision to maintain the interest rate at 5.25% on Thursday. Reuters reported that BoE Governor Andrew Bailey mentioned during the post-decision press conference that "a rate cut next month was a possibility," but he intends to wait for inflation, activity, and labor market data before deciding. This has raised the prospect of future rate cuts, putting pressure on the British Pound and weakening the GBP/USD pair.

Subsequently, the US Bureau of Labor Statistics (BLS) released data indicating that the number of individuals filing for unemployment benefits surpassed expectations. Initial Jobless Claims for the week ending May 3 rose to 231,000, exceeding estimates of 210,000 and showing an increase from the previous week's reading of 209,000. This suggests a potential shift toward a less hawkish policy outlook by the Federal Reserve (Fed), resulting in pressure on US Treasury yields and undermining the US Dollar (USD).

On Friday, the preliminary Michigan Consumer Sentiment Index is forecasted to show a slight decrease in May. This index is a survey that evaluates sentiment among US consumers, encompassing three primary areas: personal finances, business conditions, and buying conditions.

• GBP/USD trades with a mild positive bias around 1.2525 amid the weaker USD on Friday. 
• The BoE kept rates unchanged at 5.25% and opened the door to a rate cut sooner than expected.
• Fed’s Daly said it’s difficult to make projections for policy until the central bank gets more clarity.

The GBP/USD pair posts modest gains near 1.2525 during the early Asian session on Friday. The major pair bounces off the lows of 1.2445 after the Bank of England (BoE)’s dovish hold. The attention on Friday will shift to the first reading of the UK Gross Domestic Product (GDP) for Q1 and the US Michigan Consumer Sentiment report. 

The BoE kept its borrowing costs on hold at 5.25% for the sixth meeting in a row on Thursday and signaled that it could begin cutting interest rates as early as next month as inflation is “moving in the right direction.”  The BoE Governor Andrew Bailey stated during the press conference that “a rate cut next month was a possibility.”, but he will wait for inflation, activity, and labor market data before making the decision. The dovish stance from the UK central bank that opened the door to future cuts in interest rates exerted some pressure on the Pound Sterling (GBP) following the monetary policy meeting.

Meanwhile, BoE Chief Economist Huw Pill said that the central bank was more confident that they would consider rate cuts over the next few meetings, although they needed more evidence. Investors have been pricing in two rate cuts this year, with the first expected in August. 

On the other hand, San Francisco Fed President Mary Daly said late Thursday that uncertainty about the next few months of inflation has increased and it may take “more time” to bring inflation down to the central bank’s target. A cautious approach to setting interest rates implied that the current rates will likely stay at their current levels for longer. The divergence of policy between the BoE and the Fed is likely to weigh the Cable and cap the pair’s upside in the near term. 

• GBP/USD has been trading volatile after the BoE’s decision; stands above 1.2500.
• BoE’s Bailey sounded dovish after stating they would need to lower rates below what’s priced in.
• Thursday’s price action is forming a ‘hammer,’ hinting further upside is seen.

The Pound Sterling erased some of its earlier losses against the US Dollar and edged up by 0.03% after the Bank of England’s (BoE) monetary policy decision. The GBP/USD traded at 1.2503 after hitting a low of 1.2445.

Earlier, the BoE held rates unchanged in a 7-2 split vote, with David Ramsden and Swati Dhingra voting for a quarter of a percentage point. After releasing its monetary policy statement, the BoE hosted a press conference. BoE Governor Andrew Bailey stated the central bank would need to cut rates more than it is currently priced by market rates.

GBP/USD Price Analysis: Technical outlook

Given the fundamental backdrop, the GBP/USD remains neutral with a downward bias, with the pair failing to crack the 200-day moving average (DMA) decisively. Even though momentum favors sellers, as depicted by the Relative Strength Index (RSI) being in bearish territory, they would also need to push the exchange rate back below 1.2500.

In that outcome, the GBP/USD next support would be the May 9 low of 1.2445, followed by the 1.2400 figure. Below this level, the next major support level emerges at the year-to-date (YTD) low of 1.2299.

It should be said that today’s price action is forming a ‘hammer.’ With that said, if buyers clear the 200-DMA at 1.2542, the next resistance would be the confluence of the May 6 high and the 50-DMA at around 1.2594/1.2600. Once cleared, the 100-DMA at 1.2634 would follow.

GBP/USD Price Action – Daily Chart

• GBP/USD extends losses ahead of the interest rate decision by BoE on Thursday.
• BoE is expected to maintain its policy rate at 5.25% until September.
• The US Dollar is strengthening on the expectations of the Fed keeping higher rates for an extended period.

GBP/USD extends its losing streak for the third successive session, trading around 1.2490 during the Asian session on Thursday. Thursday brings the Bank of England (BoE) interest rate decision, with expectations of maintaining interest rate at 5.25%.

Investor expectations regarding potential interest rate cuts by the Bank of England (BoE) have been delayed until September, amid concerns about strong wage growth in the United Kingdom (UK). This wage growth is contributing to core inflation, which is the central bank's preferred inflation measure. The annual inflation rate dropped to 3.2% in March, down from 3.4% in February. However, it stayed slightly above the market expectation of 3.1%. This marked the lowest rate since September 2021.

Across the pond, the US Dollar (USD) is gaining ground due to the expectations of the Federal Reserve (Fed) maintaining higher interest rates. Additionally, the higher US Treasury yields support for the US Dollar (USD), undermining the GBP/USD pair.

From the Federal Reserve (Fed), Boston Fed President Susan Collins emphasized on Wednesday the importance of a period of moderation in the US economy to achieve the central bank's 2% inflation target. On Tuesday, Minneapolis Fed President Neel Kashkari said that the prevailing expectation is for rates to stay unchanged for a considerable period, as per Reuters reports.

• GBP/USD trades on a softer note near 1.2495 in Thursday’s early Asian session. 
• Fed’s Collins emphasized the need to stay higher for longer, as it will take longer than previously thought to bring inflation down.
• The BoE is widely expected to keep its policy rate unchanged at 5.25% on Thursday. 

The GBP/USD pair remains on the defensive around 1.2495 on Thursday during the early Asian session. Greenback edges higher for the third consecutive day, which weighs on the major pair. Traders turn to cautious mode ahead of the Bank of England (BoE) interest rate decision later in the day, with no change in rate expected. Also, the US weekly Initial Jobless Claims are due on Thursday, followed by the Federal Reserve’s (Fed) Mary Daly speech. 
 
The Fed officials have offered some cues amid the absence of US top-tier economic data releases earlier this week. On Wednesday, Boston Fed President Susan Collins said it will take longer than previously thought to bring inflation down to the 2% target, emphasizing that the rate will likely stay higher for longer. New York Fed president John Williams and Minneapolis Fed president Neel Kashkari also showed that they favor holding rates at current levels for longer. These hawkish comments from the Fed policymakers provide some support for the US Dollar (USD) and create a tailwind for the GBP/USD pair. 

The FOMC committee decided to keep interest rates unchanged last week. The hotter-than-expected US inflation data has kept officials from lowering borrowing costs. Financial markets see under two cuts this year, from as many as six seen at the beginning of 2024.

On the other hand, the BoE is likely to keep the key rate of interest unchanged at 5.25% at its May meeting on Thursday. However, the downward trajectory of the UK’s inflation has triggered speculation that the BoE might cut its rate before the US Fed. Investors will take more cues from the BoE’s Bailey and Pill speeches on Thursday. In the event that the BoE policymakers continue their dovish stance, the Pound Sterling (BoE) might face further depreciation. 

• GBP/USD falls 0.20% as market anticipates Bank of England's policy decision.
• Technically, the pair shows a downward trend, supported at 1.2467 but remains under seller pressure with a bearish RSI.
• If GBP/USD exceeds 1.2500, resistance may occur at 200-DMA (1.2543), 1.2594, and May 3 high of 1.2634.

In early trading on Wednesday, the Pound Sterling resumed its downtrend against the US Dollar, as the Greenback remained the strongest currency against other peers. Despite printing losses, Cable remains at familiar levels, ahead of the Bank of England (BoE) monetary policy decision. The GBP/USD trades at 1.2483, down 0.20%.

GBP/USD Price Analysis: Technical outlook

The GBP/USD is biased downward, though it failed to crack a support trendline at around the day’s low of 1.2467, which could have opened the door for further losses. Despite the bounce, momentum is still favoring sellers, with the Relative Strength Index (RSI) standing at bearish territory, with its slope aiming down.

In the event of GBP/USD clearing the 1.2500 psychological level, the next resistance would be the 200-day moving average (DMA) at 1.2543. Once cleared, the next stop would be intermediate resistance at the May 6 high at 1.294, followed by the latest cycle high seen at 1.2634, the May 3 high.

GBP/USD Price Action – Daily Chart

• GBP/USD weakens to 1.2500 amid a firmer USD on Wednesday.
• Fed’s Kashkari said it’s too early to declare that inflation has stalled out, and they might cut rates this year if inflation eases.
• The BoE is expected to leave the interest rate unchanged at 5.25% at its May meeting on Thursday.

The GBP/USD pair trades on a softer note around 1.2500 on Wednesday during the early Asian session. The USD Index (DXY) recovers modestly to 105.40, which drags the major pair lower. The Federal Reserve’s (Fed) Philip Jefferson,  Susan Collins, and Lisa Cook are scheduled to speak later on Wednesday. The Bank of England's (BoE) interest rate decision will take centre stage on Thursday.

Minneapolis Fed Bank President Neel Kashkari said on Tuesday that it is too early to declare that inflation has stalled out, and the Fed might cut interest rates this year if price pressures ease. Richmond Fed President Thomas Barkin stated that he believes that current rates will be enough to bring inflation down and that the Fed can afford to be patient due to a strong job market. The US Fed officials reiterated that more data would be needed in the outlook for inflation returning to the 2% target before cutting rates.

Fed easing expectations have fallen a bit and lifted the Greenback against its rivals. The chance of a June cut remains steady at around 10%, while September odds have fallen to 85%, according to the CME FedWatch tool. On Friday, traders will monitor the preliminary University of Michigan Consumer Sentiment Index, which is estimated to drop from 77.2 in April to 76.0 in May.

On the other hand, the Pound Sterling (GBP) edges lower as investors focus on the upcoming monetary policy meeting. The UK central bank is anticipated to hold interest rates steady at 5.25%. However, there is speculation that the BoE will cut interest rates earlier than the Fed, which weighs on the Cable. BoE Governor Andrew Bailey said last month that he was comfortable with market expectations of two or three rate cuts for this year. 

• GBP/USD trades with minor losses, movements bounded by key levels before BoE decision.
• Technical outlook neutral to slightly bullish; resistance at recent high of 1.2594 and 50-DMA at 1.2607.
• Break below 200-DMA at 1.2545 could trigger further declines, with supports at 1.2500 and May 1 low of 1.2466.

The Pound Sterling registers anemic losses against the US Dollar as traders brace for the Bank of England’s (BoE) monetary policy decision on Thursday. The pair remained within the 1.2529-1.2594 boundaries during the last few days, capped by key support and resistance levels. The GBP/USD trades at 1.2556, down 0.04%.

GBP/USD Price Analysis: Technical outlook

The daily chart portrays the pair as neutral-biased, with momentum skewed to the upside, as depicted by the Relative Strength Index (RSI). The RSI is bullish, though close to the 50-midline, an indication that volatile price action could trigger a momentum shift.

With that said the first resistance of the GBP/USD would be the May 6 high at 1.2594. Once cleared, that could pave the way to test 1.2600, ahead of the 50-day moving average (DMA) at 1.2607. Further upside is seen at the 100-DMA at 1.2640, followed by the April 9 high at 1.2709.

On the other hand, if the GBP/USD dips below the 200-DMA at 1.2545, that would exacerbate a test of 1.2500. Once hurdled, the next support emerged at the May 1 low of 1.2466, followed by the 1.2400 figure.

GBP/USD Price Action – Daily Chart

• GBP/USD holds positive ground around 1.2560 on the softer USD on Tuesday. 
• Slower US job growth has triggered speculation that the Fed will cut the interest rate this year. 
• The BoE is expected to hold rates at 5.25% for the fifth time in a row on Thursday. 

The GBP/USD pair trades in positive territory for the fifth consecutive day near 1.2560 during the Asian session on Tuesday. The weaker US Dollar (USD) provides some support to the major pair. The Bank of England (BoE) interest rate decision on Thursday will be in the spotlight, with no change in rate expected. 

Investors increased their bets that the US Federal Reserve will cut the interest rate this year after US employment data last week slowed more than expected in April. Fedspeak this week might offer some hints about future monetary policy. On Monday, Richmond Fed President Thomas Barkin said that the current interest rate level should cool the economy enough to bring down inflation to the 2% target, with the strength of the job market giving officials time to gain confidence that inflation will fall. 

Meanwhile, New York Fed President John Williams stated that while rate cuts would happen, monetary policy was currently in a very good place. Later in the day, Fed Bank of Minneapolis President Neel Kashkari is set to speak. The dovish tone of Fed officials might drag the Greenback lower and create a tailwind for the GBP/USD pair for the time being. According to LSEG's rate probability app, financial markets have priced in rate cuts worth 46 basis points (bps) from the Fed by the end of 2024, with the first cut expected in September or November. 

On the other hand, the BoE is expected to hold rates at 5.25% at its May meeting on Thursday. Traders will closely monitor about possible timescale for rate cuts and the BoE’s guidance on interest rates. Nonetheless, the dovish comments from the BoE Governor Andrew Bailey and Deputy Governor Dave Ramsden in April triggered speculation that the easing cycle of the BoE may be closer to the European Central Bank (ECB) than to the Fed. The BoE's Bailey noted that he is confident that headline inflation will return to the desired rate of 2% in April. The dovish stance of the UK central bank might weigh on the Pound Sterling and cap the downside of the pair. 

• GBP/USD trades above 200-DMA at 1.2547, lifted by positive sentiment.
• Technicals suggest upward trend, with resistance at 50-DMA (1.2609) and 100-DMA (1.2634/42).
• Fall below 200-DMA could favor sellers, next supports at 1.2500 and May 1 low of 1.2466.

During the North American session, the British Pound registered modest gains versus the US Dollar. The Bank of England (BoE) will decide on monetary policy in a week. That and an upbeat market sentiment underpin the GBP/USD's higher trading at around 1.2579, above a key support level.

GBP/USD Price Analysis: Technical outlook

The GBP/USD is neutral to upward biased in the near term after breaching the 200-day moving average (DMA) at 1.2547. From a momentum standpoint, the Relative Strength Index (RSI) shifted bullishly, which could open the door for challenging the 1.2600 mark, slightly below the 50-DMA at 1.2609.

A breach of the latter will expose the confluence of the May 3 high and the 100-DMA at around 1.2634/42 before edging toward 1.2700.

On the other hand, if the GBP/USD tumbles below the 200-DMA, sellers could regain control. The first support would be the 1.2500 figure, followed by the May 1 low of 1.2466. Once cleared, the next stop would be 1.2400, followed by the April 22 low of 1.2299.

GBP/USD Price Action – Daily Chart