- Investors were cautious ahead of the US inflation report and the FOMC policy meeting.
- Economists expect headline inflation to fall from 0.3% to 0.1% in May.
- GDP data on Wednesday revealed no growth in the UK in April.
GBP/USD price analysis shows little movement, reflecting investor caution ahead of a key US inflation report. The pound rose despite data showing a slowdown in the UK economy.
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The dollar paused its gains at a four-week high in the previous session as investors took a cautious stance ahead of the US consumer inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. Meanwhile, the Fed is likely to keep interest rates unchanged and provide projections for continued economic growth.
Elsewhere, GDP data on Wednesday showed no growth in the UK in April, down from a 0.4% rise in March. The fall was due to rainy weather and relieved the Bank of England, which plans to cut interest rates later this year. However, this had little impact on the pound as all the focus was on the US inflation report.
Employment data from the previous session also showed that the UK economy is in decline. The unemployment rate rose from 4.3% to 4.4% in Q1. Furthermore, the report showed that the number of those with jobs fell by 207,000 from the end of 2023, while the number of unemployed rose by 190,000.
GBP/USD key events today
- US CPI report
- FOMC meeting
- FOMC press conference
GBP/USD Technical Price Analysis: Bulls face 30-SMA resistance
On the technical side, the GBP/USD price is pushing towards the 30-SMA resistance as the bulls try to take control. At the same time, the RSI rose above 50, indicating an increase in bullish momentum. This move started when the price reached the support level of 1.2700. If the bulls succeed, the price will retest the 1.2800 resistance level.
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The previous bullish trend was paused when it reached resistance at 1.2800. It entered a period of consolidation, but the RSI showed a bearish divergence, indicating weaker bullish momentum. Therefore, if the bulls break above 1.2800, it will confirm the continuation of the uptrend. On the downside, if the level remains firm, the price will fall to retest the 1.2700 support.
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