- The data shows that the UK economy grew by 0.6% in Q2.
- Markets now see a 25 basis point Fed rate cut as more likely.
- Investors await the US retail sales report.
The GBP/USD outlook is bullish after data revealed the UK economy expanded in line with economists’ expectations. At the same time, investors are more confident that the Fed will cut interest rates in September after US inflation eased slightly compared to the previous month.
–Are you interested in learning more about STP brokers? Check out our detailed guide-
The pound rose on Thursday after data showed the UK economy grew 0.6 percent in the second quarter. The UK economy is struggling to recover from the COVID-19 pandemic, but has remained stable.
In the previous session, the pound fell as data revealed cooler-than-expected consumer inflation numbers. Furthermore, services inflation eased, increasing the chances of a Bank of England rate cut in September.
Meanwhile, the Fed is likely to cut rates in September. However, markets now see a 25 basis point rate cut as more likely. Inflation data on Wednesday showed further easing, with the annual figure falling below 3% for the first time. Meanwhile, the monthly figure rose 0.2% but was in line with expectations.
After the report, the odds of a 25 basis point rate cut in September rose to 64%. Initially, panic after the US jobs report raised expectations for a 50 basis point rate cut. However, that changed as fears of a recession subsided. Currently, the chance of such a reduction is 36%.
Inflation in the US has performed well since the second quarter. The decline has been consistent, giving policymakers confidence. Investors will now be watching the retail sales report to learn more about the state of the economy.
GBP/USD key events today
- US Core Retail m/m
- USA retail m/m
- US unemployment claims
GBP/USD Technical Outlook: Bulls have set their target on resistance at 1.2900
On the technical side, the GBP/USD price is on the rise after a brief pullback. The bullish bias is strong as the 30-SMA points to the upside and the RSI trades near the overbought region. Therefore, there is a high chance that the price will rise.
–Are you interested in learning more about forex earnings? Check out our detailed guide-
The next strong barrier is at the psychological resistance of 1.2900. If the price reaches this level, it will retrace 61.8% of the previous swing. A break above this retracement level will strengthen the bullish bias. However, GBP/USD could pause here before breaking above.
Do you want to trade Forex now? Invest in eToro!
67% 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.
