- The US will release inflation data later today.
- UK data showed slower growth in starting salaries for permanent workers in March.
- Monetary policies in the UK and the US are converging.
Excitement brews in GBP/USD price analysis as the pound gains ground in anticipation of pivotal US data. Investors are on the edge, awaiting the imminent US Consumer Price Index report. This eagerly anticipated release holds the potential to reshape perceptions regarding rate cuts in the US.
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The US will release inflation data later today that will give a clear picture of the state of price growth in the economy. Fed policymakers have monitored inflation over the past few months to see if it is on the path to 2%. A downtrend will give them enough confidence to settle on the first-rate cut’s timing. However, the last inflation report revealed that price growth had stalled. As a result, there is uncertainty about the outlook for interest rate cuts. Another unexpectedly hot report would likely further delay rate cuts and increase uncertainty. However, a decline would help policymakers decide the best time to start rate cuts.
Meanwhile, in the UK, data on Monday showed slower growth in starting salaries for permanent workers in March. A drop in wage increases would allow inflation to drop to the 2% target. Consequently, the Bank of England would be more willing to cut interest rates. At the same time, investors are awaiting UK GDP data on Friday.
Currently, monetary policies in the UK and the US are converging. This indicates that the Fed has become less dovish while the BoE is less hawkish. However, this might change with the incoming US inflation data.
GBP/USD key events today
- US Core CPI m/m
- US CPI m/m
- US CPI y/y
- FOMC Meeting Minutes
GBP/USD technical price analysis: Higher high solidifies bullish sentiment
On the technical side, the GBP/USD price has fully confirmed the new bullish direction by making a higher high. Moreover, the price has broken above the 1.2650 key resistance level. The bullish bias is strong, with the 30-SMA facing up and the RSI above 50.
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Therefore, bulls will likely target the next resistance at the 1.2800 key level. However, the trend might be shallow because the price stays close to the 30-SMA. Still, bulls will maintain control if the price remains above the SMA.
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Saqib Iqbal
