- The GBP/USD forecast suggests a hawkish stance from BoE’s Mann.
- BoE’s Mann noted that household inflation expectations had gone up.
- Inflation in the US increased by a smaller-than-expected 0.2% in April.
The GBP/USD forecast suggests a hawkish stance from BoE’s Mann, who believes the labor market is more resilient than expected. As a result, rate cut expectations have eased, supporting the pound. At the same time, the dollar was fragile after poor inflation figures from the previous session.
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Catherine Mann said on Wednesday that the UK labor market was more resilient than she expected. This was one of the reasons she voted to keep rates on hold at last week’s meeting. Furthermore, she noted that household inflation expectations had gone up. Therefore, the central bank should proceed with caution. Mann and Huw Pill were the two policymakers who surprised markets by voting to hold rates.
Elsewhere, data on Tuesday revealed that inflation in the US increased by 0.2% in April. Meanwhile, economists had expected a 0.3% increase. At the same time, the annual figure increased by 2.3%, compared to forecasts of 2.4%. The poor figures increased pressure on the Fed to lower borrowing costs.
Nevertheless, there is still a chance that inflation will rebound after Trump’s tariffs. Therefore, policymakers might remain cautious. Still, the outlook for the economy has improved since China and the US agreed to slash tariffs.
GBP/USD key events today
Traders are not expecting high-impact releases from the UK or the US. Therefore, they will keep digesting the US CPI report.
GBP/USD technical forecast: Bulls return after false breakout
On the technical side, the GBP/USD price is back in its consolidation area after a failed breakout. The price currently trades above the 30-SMA with the RSI heading for the overbought region. Therefore, bulls are in the lead and might soon retest the range resistance level.
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Before the consolidation, GBP/USD was trading in an uptrend. Therefore, the price stayed above the 30-SMA. However, this changed at the 1.3401 resistance. The price started chopping through the SMA with no clear direction. Moreover, it mostly remained between the 1.3050 support and the 1.3401 resistance levels.
Recently, bears triggered a breakout. However, they were unable to sustain a move lower. As a result, bulls are back in the lead and will likely challenge the range resistance. A break above would resume the previous uptrend.
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Saqib Iqbal
