- The pound surged to its highest level in 15 months against the dollar.
- British wages, excluding bonuses, rose 7.3% in the three months leading up to May.
- Fed officials suggested that the US central bank is approaching the conclusion of its hiking cycle.
Today’s GBP/USD outlook is bullish. On Tuesday, the pound surged to its highest level in 15 months against the dollar following data that revealed stronger-than-expected wage growth. This increased pressure on the Bank of England (BoE) to raise interest rates.
Notably, the Office for National Statistics said on Tuesday that British wages, excluding bonuses, experienced a 7.3% increase in the three months leading up to May compared to the previous year. This surpassed the 7.1% rise predicted by economists surveyed by Reuters.
However, there were indications of a slight loosening in the labor market. The unemployment rate unexpectedly rose from 3.8% to 4.0% in the three months until April. Furthermore, job vacancies declined, reaching their lowest level since mid-2021.
The BoE closely monitors wage growth as it evaluates the inflationary pressure remaining in the British economy. The central bank has implemented 13 consecutive interest rate increases thus far. Moreover, Governor Andrew Bailey stated on Monday that both wage increases and company prices were rising too rapidly.
Additionally, he emphasized his commitment to combating the inflation rate, which stands at 8.7%—higher than in any other major developed economy.
Meanwhile, the dollar fell as investors evaluated statements from Federal Reserve officials. They expressed support for two additional rate hikes while suggesting that the US central bank is approaching the conclusion of its hiking cycle.
GBP/USD key events today
Investors are not awaiting any key events from the UK or the US. Therefore, all focus will be on the upcoming US inflation report.
GBP/USD technical outlook: Bulls confirm their dominance with a new high.
GBP/USD has made a new high on the 4-hour chart after breaking above the 1.2850 resistance level. The bulls returned after a pullback that retested the 1.2750 support level. They made an engulfing candle that kept the price above the 30-SMA, confirming the bullish bias.
Furthermore, the RSI respected the pivotal 50-level as support before rising toward the overbought region. With such strong momentum, bulls will likely soon break above the 1.2900 key resistance.
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