- Investors await the US core PCE price index report for more clues on Fed policy.
- US GDP data was lower than expected at 1.3% in Q1.
- Markets expect just 27 basis points of BoE rate cuts this year.
GBP/USD price analysis shows bears in favor as dollar strengthens ahead of key US inflation data. On the other hand, the pound was weak despite the recent decline in Bank of England rate cut expectations.
–Are you interested in learning more about forex tools? Check out our detailed guide-
The dollar rallied against the pound on Friday as investors awaited a report on the core US PCE price index for more clues on the Fed’s rate cut prospects. Forecasts show that this figure will remain at 0.3% compared to the previous month. However, there is a chance that it will surprise.
Interest rate cut expectations in the US have been a wild ride as the data has been mostly mixed. Last week, the dollar strengthened as business activity data came in higher than expected. In addition, there was a jump in consumer sentiment this week, leading to lower expectations for a rate cut.
Still, there were signs that the strong economy was showing cracks that could prompt the Fed to cut rates this year. In particular, consumer inflation decreased in April. Furthermore, yesterday’s GDP data came in lower than expected at 1.3% in Q1 from a previous reading of 1.6%.
Meanwhile, in the UK, expectations for a rate cut by the Bank of England have fallen since the release of better-than-expected growth and inflation data. Markets now expect just 27 basis points of rate cuts this year, meaning one cut in 2024.
GBP/USD key events today
GBP/USD technical price analysis: Price is breaking below the 30-SMA
On the technical side, the GBP/USD price finally broke below and retested the 30-SMA, showing renewed bearish sentiment. The decline came after the price encountered resistance at the key psychological level of 1.2800.
–Are you interested in learning more about the best cryptocurrency exchange? Check out our detailed guide-
The bears had already started to show signs of an impending reversal when the price made a bearish candle. However, it continued to rise as the bulls struggled to maintain control. Meanwhile, the RSI showed weaker bullish momentum as it made a bearish divergence.
The bears were finally strong enough to break the 30-SMA support, retest it and now look to make a lower low. The bearish move will continue if the price breaks below the support level at 1.2700.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
