- Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January.
- Market participants expect the first BoE cut in June.
- Investors await the report on the US producer price index (PPI).
Today’s GBP/USD forecast is slightly bullish after UK data revealed economic growth in January after a brief recession. Meanwhile, investors remained wary of high-impact economic data from the US.
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Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January. This followed a fall in the previous month. However, despite this positive report, rate cut bets have remained steady, with market participants now expecting the first BoE cut in June. Consequently, the pound barely rose.
Notably, the change in expectations for the first rate cut from August to June followed the recent UK jobs report. The jobs report revealed weakness in the labor market with the unemployment rate rising. As a result, traders now believe the Bank of England will cut rates sooner.
Earlier, the pound had risen on the view that the BoE would be among the last major central banks to cut rates. However, that view has changed, leaving the pound vulnerable.
Meanwhile, the dollar held steady ahead of more U.S. inflation data. Investors await the producer price index (PPI) report later today. A higher-than-expected value could strengthen the dollar, as it would likely lead to lower rate cut expectations. In addition, the US will release retail sales data, showing the state of consumer spending.
GBP/USD key events today
- US Producer Price Index Report
- US Retail Sales Report
- US Jobless Claims Report
GBP/USD Technical Forecast: Price is falling below the 30-SMA, threatening an uptrend
On the technical side, GBP/USD broke below the 30-SMA, indicating that the bears are challenging the bullish trend. However, the bulls still maintain control as the price is holding close to the 30-SMA. At the same time, the RSI is above 50, showing that the bullish momentum is still strong.
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If the bears cannot break away from the SMA, the price is likely to push above the SMA to retest the resistance level at 1.2850. Furthermore, a break above 1.2850 would allow the bulls to retest the psychological level of 1.2900. Accordingly, the price would make a higher high, continuing the bullish trend. However, if the bears take control, it will fall to a retest of support at 1.2750.
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