- The pound hovered near 15-month highs after positive wage growth numbers.
- Investors anticipate that core US consumer prices will have increased 5% annually in June.
- Basic earnings in the UK in the three months leading up to May increased at the joint quickest rate ever.
Today’s GBP/USD forecast is bullish. The pound hovered near 15-month highs after wage growth numbers fueled assumptions that the Bank of England has further to go in hiking rates.
Moreover, the US inflation report, due later on Wednesday, had investors fixated. They anticipate that core consumer prices will have increased 5% annually in June. Furthermore, the data might indicate how much more the Federal Reserve might increase interest rates.
Notably, the dollar hit a two-month low against a basket of currencies before the release.
According to Jordan Rochester, currency strategist at Nomura, the significant figure in the consumer price report will probably be the monthly change in the core inflation rate.
Some in the market anticipate a rise in the core rate of just 0.2% in June. This is because several indicators, including used-car prices, indicate a considerable decline in inflation. However, Reuters polled economists, and they predicted a 0.3% increase.
According to British data released Tuesday, basic earnings in the three months leading up to May increased at the joint quickest rate ever. This was above expectations for a 7.1% increase. Consequently, markets are pricing in a peak BoE rate of approximately 6.4% by March, up from the current 5%.
Elsewhere, the Bank of England said on Wednesday that Britain’s economy has so far shown resilience in the face of an increase in rates.
GBP/USD key events today
All focus is on the inflation report, which will likely show a drop in inflation. Such an occurrence would lead to a decline in the dollar and a rise in the pound.
GBP/USD technical forecast: Sellers trigger retracement at the 1.2951 resistance.
The pound has risen further, hitting the 1.2951 resistance level. This new high has pushed the price farther from the 30-SMA, indicating a bullish trend. Furthermore, the RSI has been in and out of the overbought region, a sign that bullish momentum is strong.
At the moment, the price seems set to retrace the recent move as bears have resurfaced. A pullback would likely stop at the 1.2850 support level, allowing bulls to continue the uptrend.
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