- The UK economy grew the most in almost three years in Q1.
- US data revealed a sharp jump in initial jobless claims to an 8-month high.
- Another BoE policymaker voted to cut rates.
The GBP/USD outlook shows an increase in bullish momentum as the pound strengthens after better-than-expected GDP data. At the same time, the dollar was weak after another bad jobs report.
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Friday’s data showed that the UK economy grew by the most in almost three years in Q1. This ended the shallow recession experienced in the second half of 2023. GDP increased by 0.6% in the first quarter of 2024.
Meanwhile, data on Thursday from the US revealed a sharp jump in initial jobless claims to an 8-month high. This confirmed the recent view that the labor market is cooling, leading to a sharp drop in the dollar. Moreover, the jobless claims report came on the heels of poor nonfarm payrolls, revealing a larger-than-expected decline in employment in April. Furthermore, other data showed that US jobless claims fell to a three-year low in March.
All of these reports boosted market confidence that the US labor market is easing. As a result, there will be less inflationary pressure, allowing the Fed to cut interest rates. For that reason, investors are back to pricing in two Fed rate cuts in 2024.
Elsewhere, the pound fell after the Bank of England’s policy meeting, where the central bank kept rates at 5.25%, as expected. Another policymaker voted to cut rates, indicating growing confidence that inflation will meet the central bank’s target. Furthermore, Governor Bailey said he is optimistic that things are moving in the right direction.
GBP/USD key events today
- US Consumer Sentiment Report
GBP/USD Technical Outlook: Bullish momentum breaks 30-SMA
On the technical side, the GBP/USD price is on the verge of breaking above the 30-SMA. Meanwhile, the RSI has crossed above 50, indicating a shift in sentiment to the bullish side. This comes after the price failed to break below the 0.5 Fib level.
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The bulls reversed the move with a bull candle. If the price closes above the SMA, it will confirm a bullish takeover. Moreover, it would allow the price to target and retest the key resistance level of 1.2600. A break above this level would make a higher high and strengthen the bullish bias.
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