empty
11.06.2024 01:00 AM
The pound has a good chance of maintaining a bullish bias. Overview of GBP/USD

The UK economy is gradually recovering from the downturn in the second half of 2023. GDP growth in Q1 was 0.9% after falling 0.8% in the second half of 2023. The first data for April will be published on Wednesday, and there is no reason to assume that growth will turn negative again.

The day before that the Labor Market Report will be released, which is traditionally important in terms of average wage trends. It peaked last July at 8.5% before starting to decline, but has remained relatively stable near 5.7% for the past four months. This is still too much to expect a Bank of England rate cut, with the market seeing the first cut in November, although there is a slight possibility in favor of September.

This image is no longer relevant

As we can see, the Bank of England rate outlook is very close to the Federal Reserve rate outlook, meaning that the current GBP/USD quotes do not include expectations of a possible change in the yield differential, and the current rise in the pound is more due to the pace of economic recovery and a slightly higher threat of inflation resumption than in the US. The BoE's next meeting is on July 20, the market is confident that there will be no rate cut and will focus on macroeconomic indicators such as employment and wages.

Wednesday will be a key day for the pound, as before the release of the US inflation report and the outcome of the Fed meeting, a number of its own macroeconomic indicators will be released - GDP for April, trade balance, industrial production indices, plus NIESR's estimate of the GDP growth rate in May. Before the Fed meeting these data will have little impact, but after the meeting they will be factored into the overall picture, and so far forecasts suggest that these data will be in the pound's favor.

The net long GBP position increased by 1.4 billion during the reporting week, the total bullish bias is 3.5 billion. The bullish correction has been ongoing for the sixth consecutive week, the price is distinctly above the long-term average, and even Friday's shocks did not turn it down.

This image is no longer relevant

The pound met strong resistance near the 1.2790/2810 trendline, but the bearish pullback, unlike the euro, was shallow. GBP found support near the technical level (23.6% pullback from the April-May rise), the next support is 1.2620/30, but the probability of a decline to these levels appears low. We expect GBP/USD to resume growth after consolidation, strong movements are unlikely before the Fed meeting. We see the local high of 1.2892 as the nearest target.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The U.S. Begins Regulating the Digital Currency Market (Potential for a Correction in Bitcoin and EUR/USD)

The U.S. House of Representatives has passed bills establishing the first federal framework for dollar-backed stablecoins and setting regulations for other digital currencies. The idea of regulating the cryptocurrency market

Pati Gani 09:28 2025-07-18 UTC+2

The Market Favors a Weak Dollar

What could be better for the S&P 500 than a Federal Reserve rate cut amid a still-strong economy? A series of positive labor market and retail sales data, combined with

Marek Petkovich 09:28 2025-07-18 UTC+2

What to Pay Attention to on July 18? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are scheduled for release on Friday, but none of them are of major importance. The only noteworthy release is the University of Michigan Consumer Sentiment Index

Paolo Greco 06:13 2025-07-18 UTC+2

GBP/USD Overview – July 18: Is the Market Tired of the Dollar and Trump?

The GBP/USD currency pair once again leaned toward decline on Thursday. After the British pound strengthened on Wednesday evening following another report about Powell's dismissal, the dollar quickly recovered. However

Paolo Greco 03:56 2025-07-18 UTC+2

EUR/USD Overview – July 18: Trump Will Keep Trying to Fire Powell for Another Year

The EUR/USD currency pair continued its steady decline throughout Thursday. As a reminder, the forex market experienced an "explosion" on Wednesday evening. Donald Trump once again attempted to either fire

Paolo Greco 03:56 2025-07-18 UTC+2

Farce, Absurdity, and a Drama Series

Since Donald Trump continues his attempts to remove Jerome Powell from the position of FOMC Chair, it's worth taking a closer look at this topic. All recent news is well

Chin Zhao 00:26 2025-07-18 UTC+2

The Bearish Trend in USD/CAD Is Nearing Its End

Canada's Consumer Price Index rose in June from 1.7% y/y to 1.9%, while core inflation increased from 2.5% y/y to 2.7%. This growth remains within an acceptable range —

Kuvat Raharjo 00:26 2025-07-18 UTC+2

AUD/USD: Knockout for the Aussie

The Australian dollar fell sharply against the U.S. dollar on Thursday, updating local price lows. The decline is driven not only by the overall strengthening of the greenback but also

Irina Manzenko 00:25 2025-07-18 UTC+2

The Dollar Doesn't Believe in Myths

What if the idea of the Federal Reserve's independence is just a myth? JPMorgan believes exactly that. The firm argues that the central bank has always interacted with the White

Marek Petkovich 00:25 2025-07-18 UTC+2

EUR/JPY. Analysis and Forecast

Today, the EUR/JPY pair is regaining positive momentum after yesterday's pullback from the 173.25 level, which now marks the yearly high, and is maintaining intraday growth. Spot prices are currently

Irina Yanina 19:08 2025-07-17 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.