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

• The Pound Sterling holds its rebound from seven-month lows against the US Dollar.
• GBP/USD stays cautious ahead of Wednesday’s US CPI inflation data.
• The Pound Sterling faces downside risks, as the daily RSI remains below 50.00.

The Pound Sterling (GBP) Is trading on the back foot against the US Dollar (USD), as the GBP/USD pair manages to hold above the 1.2600 level at the start of the week on Monday.

A negative shift in risk sentiment, despite easing Middle East geopolitical tensions, weighs on the higher-yielding Pound Sterling while the US Dollar struggles for traction amid the market’s nervousness ahead of Wednesday’s US Consumer Price Index (CPI) data.

From a short-term technical perspective, GBP/USD remains vulnerable and looks set to extend the downside break from the rising channel seen a couple of weeks ago.

The 14-day Relative Strength Index (RSI) indicator points lower below the midline, currently near 46.50, suggesting that risks remain skewed in favor of sellers.

Pound Sterling sellers, however, need to seek a daily candlestick closing below the horizontal 200-day Simple Moving Average (SMA) at 1.2587 to initiate a sustained downtrend.

The April low near 1.2540 could come to buyers' rescue then, followed by the 1.2500 round figure. Further south,  the 1.2450 static support will challenge the bullish commitments.

If buyers defend the 200-day SMA at 1.2587, it could alleviate the near-term selling pressure, allowing GBP/USD to attempt a comeback toward the static resistance shy of the 1.2700 level. 

GBP/USD must scale the critical confluence resistance at 1.2665 to add extra legs to the rebound toward 1.2700. The 1.2665 level is the intersection of the 100-day and 50-day SMAs.

GBP/USD: Daily chart

• The Pound has trimmed retraced post-NFP lows and is practically flat on the daily chart.
• Nonfarm Payrolls data shows that the US economy remains creating employment at a strong pace.
• A frail economic outlook and softer inflationary pressures are weighing on the Pound.

The Sterling is regaining lost ground on Friday’s US session following a significant reversal, with a strong US employment report sending the Dollar soaring. The pair, however, remains practically flat in the weekly chat after having whipsawed over the last few days.

US Nonfarm Payrolls increased by 303K in March beating expectations of a 200K increase to close a stellar quarter for employment. Wage inflation has continued growing, although the moderation observed in the yearly rate, which has eased to 4.1% from 4.3% in the previous month has eased concerns about a hawkish steer by the Federal Reserve.

In the UK the weak services sector activity data seen this week adds to the evidence of an uncertain economic outlook. The weak GDP and the slowing price pressures boosted speculation that the BoE might anticipate the first rate cuts, which is weighing on the Pound.

The technical picture remains bearish, with resistance at 1.2675 holding buyers ahead of 1.2755. support levels are  1.2575 and 1.2535.

• GBP/USD bounced off a key support level and rose up strongly this week. 
• Resistance from two major Moving Averages, however, prevented the trend from going higher. 
• A clear break above this resistance barrier would be required to confirm a move up to the range highs. 

GBP/USD has just bounced off the bottom of a medium-term consolidation range after forming a bullish Tweezer Bottom Japanese candlestick pattern.   

The pair rose up strongly on Wednesday and Thursday but then hit stubborn resistance at the intersection of two major moving averages – the red 50-day and blue 100-day Simple Moving Averages (SMA) – and stalled.

Pound Sterling versus US Dollar: Daily chart

The pair formed a bearish Shooting Star candlestick pattern on Thursday and is now trading just beneath it in the 1.2630s.

Given the firm floor of support at the 1.2550s, which has shown itself able to prop up price on at least three occasions since November 2023 it is likely to hold again, and the pair could be at the start of another move back up inside the range. 

However, the Moving Average Convergence/ Divergence (MACD) indicator, which is an especially useful confirmation tool for turning points in a range-bound market, has still not crossed its signal line to offer a buy signal. 

The 50 and 100 SMAs are also still providing a formidable resistance blockade above price, and ideally need to be penetrated decisively before a more bullish outlook can be adopted. 

A decisive breakthrough above the two SMAs – by which is meant a long green candlestick that breaches the resistance and closes near its high, or three green candlesticks that break through the level – would be required to confirm more upside. 

The March 21 high at 1.2804 presents as a possible target for such a revolution.

Alternatively, a decisive break below the range low at 1.2550 would lead to a volatile move lower, since support that has been retested on several occasions, when finally broken, usually ends up giving way in a dramatic fashion. 

• GBP/USD trades with mild losses near 1.2640 on the USD’s recovery on Friday.
• The US weekly Initial Jobless Claims rose last week to the highest since January.
• Investors expect the BoE to cut the rates in June as UK inflation is slowing consistently.

The GBP/USD pair trades with a mild negative around 1.2640 bias on Friday during the early Asian session. The modest rebound of the US Dollar (USD) to 104.20 amid the cautious mood provides some support to the major pair. Investors will closely watch the highly-anticipated US Non-farm Payrolls on Friday, along with the Unemployment Rate and speeches by Fed’s Musalem, Kugler, Barkin, and Bowman.

The US Initial Jobless Claims went up to a two-month high last week. The Labor Department on Thursday revealed that The number of Americans filing new claims for unemployment benefits for the week ended March 30 rose by 9,000 to 221,000 from the previous week of 212,000, below the market consensus of 214,000. Additionally, the Continuing Claims declined by 19K to 1.791M in the week ended March 23. The Greenback dropped below the 104.00 support level following the downbeat US economic data. However, the safe-haven USD pares losses as the fear of Iran's attack on Israel is driving the market.

According to the Express, the CIA has reportedly warned Israel that Iran will attack within the next 48 hours. This warning comes after Israel carried out an attack on Tehran's consulate in Damascus, Syria, killing two Iranian military leaders. The escalating geopolitical tension in the Middle East might boost the US dollar and act as a headwind for the GBP/USD pair.

On the other hand, the Pound Sterling (GBP) will be influenced by market forecasts for Bank of England (BoE) rate cuts. Investors anticipate the UK central bank to lower its borrowing costs in June as UK inflation is slowing consistently. The BoE Governor Andrew Bailey said in recent weeks that, due to further encouraging signs that inflation is cooling, the UK economy is moving towards the point where the central bank can begin cutting interest rates.

• The Pound takes advantage of US Dollar weakness to hit fresh two-week highs at 1.2675.
• A higher-than-expected increase in US Jobless Claims has increased bearish pressure on the Dollar.
• GBP/USD is testing an important resistance area at 1.2675.

The Sterling is building up bullish momentum on Thursday, buoyed by a favourable market sentiment, which is weighing on the safe-haven US Dollar.

Data from the US Labor Department revealed that Jobless Claims increased by 222K in the last week of March 29, from the upwardly revised 212K in the previous week. The market had anticipated a softer 214K increase.

Fed cut hopes are weighing on the USD

These figures together with the unexpectedly weak US Services data seen on Wednesday have restored investors confidence that the Fed might start cutting rates in June. This has improved risk appetite, capping the recovery of US Treasury yields and pushing the US Dollar lower.

Earlier this week, UK data showed that manufacturing activity expanded for the first time in the last two years. This has improved the outlook in the country’s economy, providing a fresh impulse to the Sterling.

The technical picture remains bearish, with the pair approaching an important support area at 1.2675-1.2695. Above here, the next target would be 1.275 and the March 21 high AT 1.2800. Supports are 1.2570 and 1.2535.

• GBP/USD received upward support after Wednesday's release of mixed US data.
• US Dollar faces downward pressure as several Fed officials have adopted a softer tone.
• Pound Sterling could face challenges on expectations of a rate cut by the BoE in June.

GBP/USD hovers around 1.2650 during the Asian session on Thursday. However, the US Dollar (USD) encountered challenges in the prior session following the release of mixed economic data from the United States (US), which showed a stronger ADP Employment Change but softer ISM Services PMI figures.

US ADP Employment Change increased by 184,000 in March, surpassing February's 155,000 rise and exceeding the market consensus of 148,000. Meanwhile, US ISM Services PMI declined to 51.4 in March from 52.6 in February, falling short of the anticipated 52.7.

The US Dollar Index (DXY) hovers around 104.20, by the press time, struggling to reverse recent losses. Multiple Federal Reserve (Fed) officials have adopted a softer tone regarding the trajectory of the Fed's interest rates. Fed Chair Jerome Powell reiterated the central bank's readiness to implement rate cuts, emphasizing a data-dependent approach.

Additionally, remarks from Atlanta Fed President Raphael Bostic, advocating for a rate cut in the final quarter of 2024, have drawn attention. Adriana Kugler, a member of the Fed Board of Governors, emphasized the ongoing disinflationary trend, suggesting that it would necessitate rate reductions. There are expectations of at least three cuts by the last quarter of 2024.

Global inflationary pressures seem to be subsiding, leading to speculation about potential interest rate cuts by central banks. BoE Governor Andrew Bailey has recently commented that, with further encouraging signs indicating a cooling inflation trend, the UK economy is progressing towards a point where the central bank could initiate interest rate cuts.

Money market futures traders anticipate a 25 basis point rate cut by the Bank of England (BoE) in June, with odds currently standing at 66%. Similarly, traders across the Atlantic have fully priced in a 25-basis point cut by the Federal Reserve in July. The anticipated rate cut by the BoE in June is expected to exert downward pressure on the British Pound (GBP). This leads to an undermining of the GBP/USD pair.

• GBP/USD climbs to 1.264, lifted by soft USD and dovish Fed cues, weak services data.
• Powell ties rate cuts to data; Bostic hints at delayed cuts to late 2024.
• Shifts in BoE and Fed rate cut expectations indicate evolving monetary policies.

The Pound Sterling posted solid gains against the Greenback on Wednesday after bouncing from a seven-week low of 1.2539 on Tuesday. Federal Reserve officials crossing the newswires and weaker-than-expected US services sector data are a headwind for the US Dollar, which tumbled for the second day in a row. The GBP/USD trades at 1.264, gains 0.56%.

GBP/USD rebounds from lows as Fed officials' comments and US services sector data influence currency dynamics

The Institute for Supply Management (ISM) revealed a softer-than-expected Services PMI, along with Fed Chair Jerome Powell, reaffirming that interest rates would be cut, but it would depend on upcoming data.  On the contrary, Atlanta’s Fed President Raphael Bostic stood by his stance of just one rate cut, adding that it could happen in the last quarter of 2024.

In the meantime, US Treasury yields trimmed its earlier gains a headwind for the buck. The US Dollar Index (DXY) which tracks the performance of the American currency against other six, tumbles 0.46%, down at 104.26. This comes after the release of the ISM Manufacturing PMI sent the DXY rallying to the 105.00 mark.

Bank of England and Fed rate cut expectations

Money market futures traders see the Bank of England (BoE) cutting rates 25 basis points in June, with odds standing at 66%. Across the Atlantic, traders had fully priced in a 25-basis point cut by the Fed until July 31.

GBP/USD Price Analysis: Technical outlook

Given the fundamental backdrop, GBP/USD price action suggests the pair could test the 50-day moving average (DMA) after reclaiming the 200 and the 100-DMA, each at 1.2586 and 1.2656, respectively. If those levels are taken out of the way, expect further upside at around 1.2700. On the other hand, if sellers step in and push the exchange rate below the 200-DMA at 1.2586, that could spur a test of 1.2500.

• GBP/USD trades on a stronger note near 1.2580 on the weaker USD. 
• The pair keeps the bearish vibe below the key EMA; RSI indicator holds in bearish territory. 
• The immediate resistance level will emerge at 1.2617; 1.2540 acts as an initial support level. 

The GBP/USD pair recovers some lost ground and currently trades around 1.2580 on Wednesday during the early European session. The decline of the USD Index (DXY) and the dismal market mood in the UK economy act as a tailwind for the major pair. Later on Wednesday, the ADP Employment Change and the ISM Services PMI will be due. Also, Federal Reserve (Fed) Chair Jerome Powell's speech will be a closely watched event. 

Technically, the bearish outlook of GBP/USD remains intact as the major pair is below the key 50-period and 100-period Exponential Moving Average (EMA) on the four-hour chart with a downward slope. Furthermore, the downward momentum is confirmed by the Relative Strength Index (RSI), which hovers around 44.5 in bearish territory, supporting the sellers for the time being. 

The immediate resistance level for GBP/USD will emerge near the 50-period EMA at 1.2617. The next hurdle is seen near the 1.2650–1.2660 region, portraying the 100-period EMA and the upper boundary of the Bollinger Band. A break above the latter will pave the way to the 1.2700 psychological level. Further north, the next upside target is located at a high of March 18 at 1.2746. 

On the downside, a low of April 1 at 1.2540 acts as an initial support level for the major pair. The additional downside filter to watch is a low of April 1 at 1.2540. A breach of the lower limit of the Bollinger Band at 1.2525 will expose a low of December 8 and the round mark of 1.2500. 

GBP/USD four-hour chart

• GBP/USD trades on a weaker note near 1.2575 on Wednesday.
• Many Fed officials see three rate cuts as reasonable this year.
• Traders raise their bets the BoE will cut the interest rate before the US Fed this year, weighing on the GBP.
• The US ADP Employment Change, the ISM Services PMI, and Fed’s Powell speech will be the highlights on Wednesday.

The GBP/USD pair trades with a negative mild bias around 1.2575 despite the decline of the US Dollar on Wednesday. The major pair remains vulnerable due to slowing UK inflation and a dismal market mood. The Fedspeak on Wednesday will be closely watched by traders, as it might offer some hints about the interest rate trajectory and policy outlook.

Many Fed officials spoke about the monetary policy outlook on Tuesday. Cleveland Fed Bank President Loretta Mester said that she still expects interest rate cuts this year, but ruled out the next policy meeting in May. San Francisco Fed Bank President Mary Daly also anticipates rate cuts this year but not until there’s more evidence that inflation has cooled down. San Francisco Fed President Daly said that three rate cuts this year are a “very reasonable baseline” though nothing is guaranteed. According to the CME FedWatch Tool, investors are now pricing in about a 65% odds of a rate cut by June, down from about 70% after the Fed's March meeting.

On Tuesday, the US February JOLTS Job Openings climbed to 8.756M in February from a downwardly revised 8.748M in January, better than the market estimation. Meanwhile, the Factory Orders improved to 1.4% MoM in February from a 3.8% fall in the previous reading.

On the other hand, traders raise their bets the Bank of England (BoE) will cut the interest rate before the US Fed this year, which exerts some selling pressure on the Pound Sterling (GBP). Additionally, easing UK inflation and a dismal market mood might weigh on the GBP and cap the upside of the GBP/USD pair.

Market players will keep an eye on the US ADP Employment Change, the final S&P Global Composite PMI, and the ISM Services PMI. Also, the Fed's Bowman, Goolsbee, Barr, Kugler, and Powell are set to speak later on Wednesday. If the Fed officials deliver any dovish comments, this could weigh on the Greenback and create a tailwind for the GBP/USD pair in the near term.

• GBP/USD climbs to 1.2573, rebounding amidst rising US Treasury yields and mixed signals from Fed officials.
• US job openings slightly exceed expectations, while Factory Orders show robust growth, impacting Treasury note rates.
• UK manufacturing sector returns to expansion, boosting Sterling ahead of upcoming service sector data.

The Pound Sterling registered solid gains on Tuesday after diving to a one-month low of 1.2539 on Monday as European financial markets were shut off due to a holiday. At the time of writing, the GBP/USD trades at 1.2573, a gain of 0.18%.

GBP/USD bounces back from monthly lows as manufacturing activity improves

US Treasury yields climbed on solid US economic data. The US Bureau of Labor Statistics revealed that job openings increased from 8.745M to 8.756M, above estimates of 8.75M in February. Layoffs ticked up from 1.6M to 1.7M while the quitting rate rose modestly to 3.5M. In other data, Factory Orders expanded by 1.4% MoM in February, a substantial recovery from January’s -3.8% plunge and above forecasts of 1%.

Following the data, the US 10-year Treasury note coupon rose to 4.409%, its highest since November of last year. Conversely, the US Dollar Index (DXY), which tracks the buck's performance against other six currencies, dropped 0.17% to 104.79.

Recently, Federal Reserve officials have crossed the wires. The Cleveland Fed President Loretta Mester expects the Fed could cut rates later this year, yet doesn’t see the first one at the upcoming meeting. She sees bigger monetary policy risks if the Fed cuts too soon, adding that the economic strength of the economy gives the central bank space before easing policy.

Across the pond, S&P Global revealed that Manufacturing activity, as measured by the PMI in the UK, rose from 47.5 to 50.3, exceeding estimates of 49.9. According to the survey, it was the first month of expansion in twenty, thanks to recovering demand.

Ahead in the week, the UK economic docket will feature S&P Global Services PMI. On the US front, traders’ eye Fed speeches, along with the release of the ADP Employment Change report on Wednesday and the ISM Services PMI.

GBP/USD Price Analysis: Technical outlook

The GBP/USD remains downward biased despite posting a recovery. Buyers failed to reclaim the 200-day moving average (DMA) of 1.2580, which could pave the way for a pullback toward the December 13 low of 1.2500. A breach of the latter will expose the November 17 low of 1.2374. On the other hand, if buyers push prices above the 200-DMA, look for a test of 1.2600. Key resistance levels lie at the 100-DMA at 1.2652 and the 50-DMA at 1.2676.

GBP/USD edges off support in low 1.2500s. Economists at Scotiabank analyze the pair’s outlook.

Intraday price action looks mildly positive for the GBP

• GBP/USD struggles to gain ground near 1.2545 on the stronger US Dollar. 
• The US ISM manufacturing data unexpectedly expanded for the first time in nearly 18 months.
• The dovish stance of the Bank of England (BoE) drags the GBP lower against the USD. 

The GBP/USD pair remains on the defensive around 1.2545 during the early Asian session on Tuesday. The US Dollar Index (DXY) rises above the 105.00 mark, and the US Treasury bond yields edges higher sharply overnight following the upbeat US ISM data, which creates a headwind for the GBP/USD pair. 

The US ISM Manufacturing PMI data unexpectedly expanded in March, with the index rising to 50.3 from 47.8 in February, stronger than the expectation of 48.4. The reading registered the highest level since September 2022, and it is the first time manufacturing activity has expanded since October 2022. A reading above 50 indicates that the manufacturing economy is generally expanding, while a reading below 50 signals that factory activity is generally declining. In response to the stronger-than-expected data, the US Dollar (USD) attracts some buyers across the board. 

The dovish stance of the Bank of England (BoE) in its latest monetary policy statement has exerted some selling pressure on the Pound Sterling (GBP). The BoE Governor Andrew Bailey said that market expectations for two or three rate cuts this year are “reasonable,” while adding that the UK central bank is not seeing a lot of sticky persistence. These comments trigger expectations for the BoE to cut interest rates in June and drag the GBP lower against the Greenback. 

Later on Tuesday, the UK Nationwide Housing Prices and S&P Global/CIPS Manufacturing PMI for March are due. Also, Federal Reserve (Fed) officials, including Governor Michelle Bowman, Loretta Mester, John Williams, and Mary Daly, are set to speak on Tuesday. 

• GBP/USD declines as strong US manufacturing activity and pricing pressures fuel speculation of a persistent Fed policy.
• The resilience of the US economy, evidenced by ISM data, contrasts with quiet European markets due to holiday closures.
• Upcoming UK PMI data releases could weigh the GBP/USD as market participants expect further deterioration.

The Pound Sterling slumps in the mid-North American session, as robust US economic data could dent the Federal Reserve’s intentions to cut rates. That underpinned the Greenback while US Treasury yields skyrocketed, a headwind for Cable. The GBP/USD trades at 1.2587, down 0.57%.

Pound Sterling treads water amid strong US Dollar and higher US yields.

A holiday in Europe keeps the financial markets closed. Across the Atlantic, data from the Institute for Supply Management (ISM) revealed that business activity in the US expanded in March for the first time since September 2022, suggesting the economy's resilience. The Manufacturing Purchasing Managers' Index (PMI) reached 50.3, surpassing the consensus of 48.4 and improving upon February's 47.8. Furthermore, the report highlighted an increase in the Prices Paid Index, which was its highest point since August 2022. Given the economy's better-than-expected performance, this resurgence in pricing pressures might hinder the Federal Reserve's inclination to soften its monetary policy.

Earlier, S&P Global announced a slight adjustment to March’s Manufacturing PMI for the United States, finalizing it at 51.9 compared to the initial reading of 52.2, around 13:45 GMT.

Following the data, money market traders slashed the odds for a Federal Reserve’s rate cut in June from around 60% to 56.9%, according to data from the CME FedWatch Tool.

Last week, Fed Chair Jerome Powell commented in a speech at the San Francisco Fed that the US central bank is in no rush to cut rates. Even though last week’s Core Personal Consumption Expenditure (PCE) price index came to a touch softer, the Consumer Price Index (CPI) remains above the 3% threshold. That would keep Fed officials with their hands tied and adhere to the higher for longer mantra.

On Tuesday, the UK economic docket will feature the release of Housing Prices, the BoE Consumer Credit, and the S&P Global Manufacturing PMI.

GBP/USD Price Analysis: Technical outlook

The GBP/USD exchange rate has broken the previous dynamic support level seen at the 200-day moving average (DMA) at 1.2857, opening the door for further losses. If sellers push the exchange rate below 1.2550,  the 1.2500 figure is up next. Otherwise, if the pair edges are higher than the 200-DMA, look for 1.2600 as the next supply zone, ahead of the 100-DMA at 1.2649.

• GBP/USD trades in positive territory around 1.2628 in Monday’s early European session. 
• The pair keeps the bearish outlook below the key EMA; RSI indicator lies below the 50 midlines. 
• The first upside barrier is seen in the 1.2640–1.2645 region; 1.2610 acts as an initial support level. 

The GBP/USD pair holds positive ground near 1.2628, snapping the two-day losing streak on Monday. The modest recovery of the major pair is backed by the dovish comments from Federal Reserve (Fed) Chairman Jerome Powell. The Fed’s Powell stated on Friday that recent US inflation data was in line with expectations and that the Fed's goal for the interest rate this year remained unchanged. The US central bank maintains projections of three rate cuts this year, and traders anticipate the first rate cuts will begin in the June meeting.

According to the four-hour chart, GBP/USD maintains the bearish outlook unchanged as the major pair is below the key 50-period and 100-period Exponential Moving Average (EMA) on the four-hour chart. Additionally, the downward momentum is supported by the Relative Strength Index (RSI), which lies below the 50 midlines, suggesting the path of least resistance level is to the downside. 

The first upside target for GBP/USD is seen near the confluence of the upper boundary of the Bollinger Band and the 50-period EMA at the 1.2640–1.2645 zone. A decisive break above the mentioned level will expose the 100-period EMA at 1.2671. Further north, the next hurdle is located at a high of March 18 at 1.2746, and finally the 1.2800 psychological level. 

On the flip side, the lower limit of the Bollinger Band at 1.2610 acts as an initial support level for the major pair. Any follow-through selling will see a rally to a low of March 22 at 1.2575. The contention level to watch is a low of February 14 at 1.2535, and finally at the 1.2500 round figure. 

GBP/USD four-hour chart

• GBP/USD remains in the positive territory after trimming daily gains on Monday.
• US ISM Manufacturing PMI is expected to improve to 48.4 in March, from 47.8 prior.
• GBP could face a struggle due to the speculation of the BoE initiating three quarter-point rate cuts in 2024.

GBP/USD trims intraday gains, remaining higher around 1.2530 during the Asian hours on Monday. US Dollar (USD) recovers its daily losses on risk aversion ahead of ISM Manufacturing Purchasing Managers Index (PMI) data from the United States (US) scheduled to be released later in the North American session, capping the advance of the GBP/USD pair.

However, the US Dollar Index (DXY) encountered difficulties following dovish comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday. Powell remarked that recent US inflation data was in line with expectations, supporting the Fed's position on potential interest rate cuts throughout 2024. Fed officials maintain projections of three rate cuts this year. Market participants anticipate the first of these cuts to materialize at the June meeting.

In February, US Core Personal Consumption Expenditures (PCE) increased by 0.3% month-over-month (MoM), aligning with market expectations and slightly lower than January's 0.5%. The annual index rose by 2.8%, meeting expectations and slightly lower than the previous increase of 2.9%. US Headline PCE (MoM) saw a 0.3% increase, slightly below expectations and lower than the previous month's 0.4% rise. Year-over-year PCE increased by 2.5%, meeting expectations.

On the other side, the anticipation of the Bank of England (BoE) initiating three quarter-point rate reductions in 2024 is putting pressure on the Pound Sterling (GBP). This pressure is further compounded by recent weaker economic data, indicating that the UK economy slipped into recession in the latter half of 2023. BoE Governor Andrew Bailey's statement suggesting that interest rate cuts will be considered in future policy meetings has added to this pressure.

With limited high-impact data forthcoming from the United Kingdom (UK), traders are likely to gauge the UK economic landscape by closely monitoring indicators such as Nationwide Housing Prices, S&P Global PMI, and Halifax House Prices data set to be released during the week.

• The US PCE Price Index, rose to 2.5% YoY and 0.3% MoM in February, in line with market expectations.
• The core PCE also met expectations.
• With inflation indicators in sight, investors will eye next week's employment data, as its influence can potentially postpone any rate cut decision.

In Friday's session, GBP/USD is being traded around 1.2640, registering a variation of 0.14% as investors digest the US February Personal Consumption Expenditures (PCE) figures.

Inflation in the US increased slightly to 2.5% annually in February, as per the PCE Price Index, which the Fed prefers for tracking inflation. This was a minor rise from January's 2.4% and met expectations. The index rose by 0.3% from the previous month, a tad lower than the 0.4% forecast. Core PCE, excluding food and energy, also rose by 2.8% annually, aligning with predictions, and showed a 0.3% monthly increase. With January's core PCE figures revised up, ongoing inflation may lead the Federal Reserve (Fed) to maintain higher interest rates. Upcoming employment data will be key for future policy decisions, potentially affecting the timing and extent of rate cuts.

In line with that, hot employment data may push Fed policymakers to delay cuts beyond June and post just two instead of the three forecasted cuts for 2024 which could eventually benefit the US Dollar.

GBP/USD technical analysis

On the daily chart, the Relative Strength Index (RSI) for the GBP/USD pair is lingering in the negative territory, currently reading at 44. The prevalence of the RSI within the negative area indicates stronger selling momentum. Meanwhile, the flat red histogram of the Moving Average Convergence Divergence (MACD) implies fading bearish momentum but also serves as a caution to bulls.

On a larger scale, the pair is also below the 20 and 100-day Simple Moving Averages (SMAs), but above the 200-day SMA. This suggests that despite the current conditions, the bulls continue to exhibit strength in the overall trend.

• GBP/USD drifts lower to 1.2620 in Friday’s early European trading hours. 
• The bearish outlook of the pair remains intact above the key EMA; RSI indicator supports the downward momentum. 
• The first upside barrier is seen in the 1.2645–1.2650 region; the 1.2600–1.2605 zone acts as an initial support level. 

The GBP/USD pair trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling (GBP) is backed by the growing speculation that the Bank of England (BoE) will begin the rate-cut cycle this year. Markets are fully pricing in the first rate cut in August, with a total of nearly three quarter-point interest rate cuts this year.

Technically, GBP/USD keeps the bearish vibe unchanged as the major pair is below the key 50- and 100-period Exponential Moving Average (EMA) on the four-hour chart. Furthermore, the Relative Strength Index (RSI) lies below the 50 midlines, suggesting the downward momentum of the pair and the further decline look favorable. 

The immediate resistance level for GBP/USD is seen in the 1.2645–1.2650 region, representing the confluence of the upper boundary of the Bollinger Band and the 50-period EMA. Any follow-through buying above the latter will expose the 100-period EMA at 1.2677. The additional upside filter to watch is a high of March 18 at 1.2746, en route to the 1.2800 psychological round mark.

On the downside, the lower limit of the Bollinger Band at the 1.2600–1.2605 zone acts as an initial support level for the major pair. A decisive break below this level will pave the way to a low of March 22 at 1.2575. The next downside target is located at a low of February 14 at 1.2535, and finally at the 1.2500 round figure. 

GBP/USD four-hour chart

• GBP/USD trades on a flat note near 1.2622 in Friday’s early Asian session.  
• The UK GDP contracted by 0.3% QoQ in Q4 2023, unchanged from preliminary estimates. 
• The final US Q4 GDP expanded 3.4% against the previous estimate of 3.2%, better than expected. 
• The US February Core PCE will be the highlight on Friday.

The GBP/USD pair trades sideways around 1.2622 during the early Asian session on Friday. The market is likely to be mute in light trading on Good Friday. Later in the day, the US Core Personal Consumption Expenditures (PCE) Price Index will be released. The Fed’s preferred inflation gauge is estimated to remain stable at 2.8% YoY.

The Pound Sterling (GBP) remains under some selling pressure after the economic data showed that the UK economy went into recession in the second half of 2023. The nation’s Gross Domestic Product (GDP) contracted by 0.3% QoQ in the fourth quarter, unchanged from preliminary estimates. However, the GDP numbers did not impact expectations for monetary policy, as investors already factored in a mild recession late last year. 

Additionally, the higher speculation that the Bank of England (BoE) will begin three quarter-point reductions in rates this year undermines the GBP. The BoE Governor Andrew Bailey said that interest rate cuts will be ‘in play’ at future BoE policy meetings.

On the other hand, the US economy remained robust in the fourth quarter of last year. This, in turn, provides some support to the Greenback and drags the GBP/USD pair lower. The final US Q4 GDP came in better than expected, growing 3.4% from the previous 3.2% estimate. Meanwhile, the weekly Initial Jobless Claims for the week ended March 22 were at 210K from the previous reading of 212K. Finally, the March Michigan Consumer Sentiment Index was upwardly revised to 79.4, above the preliminary estimate of 76.5. 

• The Pound finds support above 1.2580 but it remains unable to extend gains beyond 1.2670.
• Soft UK data and hawkish comments from Fed speakers are weighing on the Sterling.
• The USD has failed to capitalize on better-than-expected US GDP and Jobless Claims figures

The Sterling found support at the 1.2580 area earlier today, before bouncing up, favoured by a somewhat softer US Dollar during Thursday’s US Session. The pair, however, remains capped below 1.2665, which leaves the broader bearish trend unchanged.

The pair has been trading back and forth within a 100-pip horizontal channel, consolidating losses following a decline from Year-To-Date highs near 1.2900 in early March.

Soft UK data and hawkish Fedspeak weighing on the GBP

UK macroeconomic figures have weighed on the Sterling. The quarterly GDP revealed that the country entered recession in the last months of 2023 and inflation has cooled faster than expected, boosting hopes that the BoE could start cutting rates at the same time as the Fed, if not earlier.

In the US, Fed Governor Waller suggested that the Fed might keep interest rates higher for longer, which provided a fresh boost to the US Dollar. Investors are now looking at Friday’s PCE Prices Index to reassess the chances  of a June rate cut

Macroeconomic data released on Thursday revealed that the US economy grew at a faster-than-expected pace in the fourth quarter while Weekly Jobless Claims declined, adding to the evidence of the strong US labour market. The impact on the US Dollar, however, has been minor.

GBP/USD Technical levels to watch