- The UK released data showing expansion in the manufacturing sector in March.
- Investors are pricing a 60% chance of a BoE rate cut in June.
- Job openings in the US rose slightly in February.
The GBP/USD price analysis reveals a slightly bullish picture, with the pound maintaining its position near recent highs following a surge triggered by encouraging economic data. Meanwhile, the dollar stands firm, buoyed by optimistic data that has tempered expectations for a Fed rate cut.
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On Tuesday, the UK released data showing 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 fighting to lower inflation. If demand in the economy spikes, it could further drive price increases, derailing progress on lowering inflation. Consequently, the BoE would hesitate to lower interest rates.
At the same time, data revealed an increase in UK mortgage approvals in February. This increase came as mortgage rates fell amid expectations of lower interest rates. The GBP/USD pair fell in March as the Bank of England assumed a more dovish stance. The shift came as inflation in the UK eased faster than expected. When March began, the likelihood of a June BoE rate cut was 15%. However, at the moment, investors are pricing a 60% chance of a rate cut in June.
Meanwhile, the dollar held firm after several positive economic reports from the US. Notably, manufacturing data revealed a significant improvement from contraction to expansion in March. On Tuesday, there was a slight increase in US job openings, pointing to a still-tight labor market. As a result, Fed rate cut expectations have dropped.
GBP/USD key events today
- US ADP non-farm employment change
- US ISM services PMI
- US unemployment claims
GBP/USD technical price analysis: Rebound faces solid trendline resistance
On the charts, the GBP/USD price has recovered after pausing at the 1.2551 key support level. However, the downtrend remains intact as the price sits below the 30-SMA. Meanwhile, the RSI oscillator trades below 50, indicating strong bearish momentum.
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Consequently, the price will likely reverse lower at the nearest resistance. The bulls face a resistance trendline that could push the price to the 1.2551 support level. A break below 1.2551 would confirm a continuation of the downtrend.
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Saqib Iqbal
