- The UK released data showing an expansion in the manufacturing sector in March.
- Investors estimate a 60% chance of a BoE rate cut in June.
- US job openings rose slightly in February.
GBP/USD price analysis reveals a slightly bullish picture, with the pound holding its position close to recent highs after a jump triggered by encouraging economic data. Meanwhile, the dollar is firm, supported by upbeat data that eased expectations for a Fed rate cut.
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On Tuesday, the UK released data showing an expansion in the manufacturing sector in March. This is a sign that domestic demand is recovering. However, the news was not good for the Bank of England, which is still struggling to keep inflation down. If demand in the economy increases, this could further push up prices, disrupting progress in reducing inflation. Consequently, the BoE would be reluctant to cut interest rates.
At the same time, data revealed an increase in UK mortgage approvals in February. The increase came as mortgage rates fell amid expectations of lower interest rates. The GBP/USD pair fell in March as the Bank of England took a more dovish stance. The change came as UK inflation fell faster than expected. When March began, the probability of a BoE rate cut in June was 15%. However, at the moment investors are pricing in a 60% chance of a rate cut in June.
Meanwhile, the dollar remained firm after several positive economic reports from the US. In particular, manufacturing data revealed a significant improvement from contraction to expansion in March. There was a slight increase in US jobs on Tuesday, pointing to a still tight labor market. As a result, Fed rate cut expectations have fallen.
GBP/USD key events today
- US Non-Farm ADP Employment Change
- US ISM services PMI
- US unemployment claims
GBP/USD technical price analysis: Bounce faces solid trendline resistance
On the charts, the GBP/USD price recovered after a break at the key support level of 1.2551. However, the downtrend remains intact as the price is below the 30-SMA. Meanwhile, the RSI oscillator is trading below 50, indicating strong bearish momentum.
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Accordingly, the price is likely to reverse lower at the nearest resistance. The bulls are facing a trendline resistance that could push the price to the 1.2551 support level. A break below 1.2551 would confirm the continuation of the downtrend.
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