- Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January.
- Market participants expect the first BoE cut in June.
- Investors are awaiting the US Producer Price Index (PPI) report.
Today’s GBP/USD forecast is slightly bullish after UK data revealed economic growth in January following a brief recession. Meanwhile, investors remained cautious ahead of more high-impact economic data from the US.
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Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January. This came after a decline in the previous month. However, despite this positive report, rate-cut bets remained steady, with market participants now expecting the first BoE cut in June. Consequently, the pound barely rose.
Notably, the shift in expectations for the first rate cut from August to June came after the UK’s recent jobs report. The employment report revealed weakness in the labor market with a surge in the unemployment rate. As a result, traders now believe the Bank of England will cut rates sooner.
Previously, the pound had risen on the view that the BoE would be among the last major central banks to cut rates. However, that view has changed, making the pound vulnerable.
Meanwhile, the dollar held steady ahead of more inflation data from the US. Investors are awaiting the Producer Price Index (PPI) report later today. A higher-than-expected value could strengthen the dollar, as it would likely lead to a decline in rate cut expectations. Additionally, the US will release data on retail sales, showing the state of consumer spending.
GBP/USD key events today
- US Producer Price Index report
- US retail sales report
- US unemployment claims report
GBP/USD technical forecast: Price falls below 30-SMA, threatening uptrend
On the technical side, GBP/USD has broken below the 30-SMA, showing bears are challenging the bullish trend. However, bulls still maintain control as the price sticks close to the 30-SMA. At the same time, the RSI is above 50, showing bullish momentum remains strong.
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If bears cannot detach from the SMA, the price will likely push back above the SMA to retest the 1.2850 resistance level. Moreover, a break above 1.2850 would allow bulls to retest the 1.2900 psychological level. Consequently, the price would make a higher high, continuing the bullish trend. However, if bears take over, it will fall to retest the 1.2750 support.
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Saqib Iqbal
