- Economists believe that a rate cut in the UK is imminent.
- UK sales rose 2.9% in May after falling 1.8% in April.
- Market participants await the US PCE price index report.
The GBP/USD outlook is bearish despite a slight recovery in the pound following upbeat retail sales data. The currency remains close to recent lows amid increasing expectations for a Bank of England rate cut. Meanwhile, the dollar pulled back slightly on Monday as traders prepared for more US inflation data.
–Are you interested in learning more about the next cryptocurrency to explode? Check out our detailed guide-
After Thursday’s Bank of England meeting, economists believe a UK rate cut is imminent. The central bank kept interest rates on hold, but policymakers were more comfortable with the idea of cutting rates. As a result, the pound fell after the meeting.
However, the move reversed slightly on Friday after the UK retail sales report. Notably, sales rose 2.9% in May after falling 1.8% in April. Moreover, this was much higher than economists’ expectations of a 1.5% increase. This increase in consumer spending shows the strong demand that has raised the prospect of a rate cut.
Meanwhile, the US dollar surged last week after a rate cut by the Swiss National Bank signaled a delay in Fed rate cuts. However, interest rate cut expectations remained broadly stable following a softer-than-expected inflation reading for May.
On Friday, the US released PMI data showing the level of business activity in the economy. Notably, the manufacturing and services sectors expanded more than expected, leading the dollar to rise. Market participants are now awaiting the report on the US PCE price index, which will be released on Friday. Economists expect the annual figure to slow to 2.6%.
GBP/USD key events today
Investors are not expecting major reports from the UK or the US. Therefore, the pair could be consolidated.
GBP/USD Technical Outlook: Temporary bounce meets trendline resistance
On the technical side, the GBP/USD price is recovering after making a new low. However, the bearish bias remains intact as the price is trading below the 30-SMA with the RSI in bearish territory below 50. Hence, the recovery could only be temporary before the downtrend continues.
–Are you interested in learning more about forex tools? Check out our detailed guide-
The price is currently facing its resistance trend line and could be stopped and reversed lower. However, if it breaks above, major resistance will be at the 30-SMA line and the 1.2700 level. When the bears continue the downtrend, they will target the psychological level of 1.2600.
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.
