- Investors were cautious before the US inflation report and the FOMC policy meeting.
- Economists expect headline inflation to fall from 0.3% to 0.1% in May.
- GDP data on Wednesday revealed no growth in the UK in April.
The GBP/USD price analysis shows little movement, reflecting investor caution ahead of the pivotal US inflation report. The pound edged higher despite data showing a slowdown in the UK economy.
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The dollar paused its rally to a four-week high in the previous session as investors adopted a cautious stance before the US consumer inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. Meanwhile, the Fed will probably keep interest rates unchanged and give projections of continued economic growth.
Elsewhere, GDP data on Wednesday revealed no growth in the UK in April, down from a 0.4% expansion in March. The decline came due to rainy weather and relieved the Bank of England, which is planning to cut interest rates later this year. However, it had little impact on the pound because all focus was on the US inflation report.
Employment data in the previous session also showed that the UK economy was declining. The unemployment rate rose from 4.3% to 4.4% in Q1. Moreover, the report showed that the number of those with jobs has dropped by 207,000 since the end of 2023, while the unemployed have risen by 190,000.
GBP/USD key events today
- US CPI report
- FOMC meeting
- FOMC press conference
GBP/USD technical price analysis: Bulls confront 30-SMA resistance
On the technical side, the GBP/USD price is pushing up against the 30-SMA resistance as bulls attempt to take control. At the same time, the RSI has risen above 50, indicating a surge in bullish momentum. This move started when the price met the 1.2700 support level. If bulls succeed, the price will retest the 1.2800 resistance level.
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The previous bullish trend paused when it reached the 1.2800 resistance. It entered a consolidation period, but the RSI showed a bearish divergence, indicating weaker bullish momentum. Therefore, if bulls break above 1.2800, it will confirm a continuation of the uptrend. On the other hand, if the level holds firm, the price will fall back to retest the 1.2700 support.
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Saqib Iqbal
