- Data showed that US import prices rose 0.9% last month.
- Fed policymakers have maintained a cautious stance since the inflation report.
- The data revealed a smaller-than-expected drop in jobless claims.
Friday’s GBP/USD price analysis is slightly bullish as the dollar recovers following signs that inflation remains a concern. However, overall market sentiment showed higher expectations for a Fed rate cut, weighing on the dollar over the past few sessions.
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The dollar rose from Thursday after data showed U.S. import prices jumped 0.9 percent last month, fueling inflation concerns. Imported inflation could make the Fed hesitant to cut interest rates too soon. However, this report followed the US CPI report, which showed that economic inflation is easing. Consequently, bets on a Fed rate cut continue to rise. Moreover, investors expect at least two interest rate cuts this year, one in September and the other in December.
Meanwhile, while investors are more confident of a tapering in September, Fed policymakers have maintained a cautious stance since the inflation report. Despite the decline, Thomas Barkin said inflation is still not where it should be. Meanwhile, Loretta Mester noted that the Fed’s current tightening policy will help reduce inflation to the central bank’s target.
Further support for the dollar came after the US Labor Department revealed a smaller-than-expected drop in jobless claims. Notably, the number of jobless claims fell to 222,000, which is above forecasts for a drop to 220,000. This indicated strength in the labor market. Despite the recent cooling in the number of US jobs, there was no confirmation that the downward trend would continue. Therefore, there remains a risk that resilience will continue, keeping the Fed cautious.
GBP/USD key events today
Investors don’t expect any high-impact releases from the US or UK when the week ends. Therefore, the couple can make small moves.
GBP/USD Price Technical Analysis: Bullish bias persists amid temporary pullback
On the technical side, the GBP/USD price is pulling back after retesting the psychological level of 1.2700. However, since the pullback comes in the middle of a bullish trend, it could only be temporary. The bullish bias remains strong as the price is well above the 30-SMA and the RSI is in bullish territory.
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Therefore, it may be difficult for the bears to continue beyond the 30-SMA support. Moreover, solid support is at the key level of 1.2600, where the bulls could continue the uptrend. In that case, the price would come back to retest the resistance level at 1.2700.
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