- The GBP/USD outlook suggests weakness in the US economy that is weighing on the dollar.
- US wholesale inflation unexpectedly fell in April.
- The UK GDP unexpectedly increased by 0.2%.
The GBP/USD outlook suggests weakness in the US economy that is weighing on the dollar. On the other hand, UK GDP data came in better than expected, easing pressure on the Bank of England to lower borrowing costs.
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Data on Thursday revealed that wholesale inflation unexpectedly fell in April. The PPI fell by 0.5%, compared to forecasts of a 0.2% increase. This follows a downbeat consumer inflation report, adding pressure on the Fed to lower borrowing costs.
At the same time, a report on retail sales revealed an increase of 0.1%. However, it was a big drop from the previous reading of 1.7%. This is a sign that consumer spending fell sharply in April. At the moment, market participants expect a Fed rate cut in September. Inflation is continuing its decline toward the central bank’s target, and growth is slowing down. Still, policymakers might remain cautious to see whether Trump’s tariffs did more damage to the economy.
Meanwhile, in the UK, the GDP increased by 0.2%. Economists had not expected any expansion in April. Therefore, this came as a positive surprise. It might ease pressure on the Bank of England to lower borrowing costs. However, policymakers will keep an eye on incoming data to see the full impact of Trump’s trade policies.
GBP/USD key events today
- Preliminary UoM Consumer Sentiment
- Preliminary UoM Inflation Expectations
GBP/USD technical outlook: Bulls target the range resistance
On the technical side, the GBP/USD price is climbing after bouncing off its range support and the 30-SMA. The bullish bias is strong because the price trades above the SMA with the RSI above 50. However, on a larger scale, the price remains in consolidation between the 1.3251 support and the 1.3401 resistance.
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Previously, bears tried to break out of this consolidation. However, they failed to sustain a move lower. As a result, GBP/USD got back into its range. With bulls in the lead, the price might soon retest the range resistance level. A break above would signal the start of a bullish trend. On the other hand, if the resistance holds as it has done before, the price will remain in consolidation.
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Saqib Iqbal
