GBP/USD Outlook: Dollar Extends Gains After Upbeat Data

• BOE’s Silvana Tenreyro warned of the risks of raising rates too high.

• Core inflation in the US increased by 0.6% last month.

• Consumer spending in the United States rose by 1.8% last month.

Today’s GBP/USD outlook is bearish. The dollar was at the forefront on Monday thanks to a barrage of upbeat US economic data. It stayed close to a seven-week high as it became clear that the Federal Reserve would have to raise interest rates for a more extended period.

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With a 3% rise for February, the dollar index is on track to snap a four-month losing run.

According to data released on Friday, the personal consumption expenditures (PCE) price index increased by 0.6% last month.

According to the Commerce Department, consumer spending contributes to more than two-thirds of all economic activity in the United States rose by 1.8% last month.

The market expects US interest rates to peak in July at 5.4% and stay over 5% through the end of the year.

Silvana Tenreyro, the Bank of England’s interest rate setter, claimed that the oil price shock and time lag in how monetary policy operates brought a risk of raising borrowing costs too high when trying to lower inflation.

Tenreyro made the remarks in slides she was scheduled to present during a panel discussion on inflation at a conference on Friday organized by the Federal Reserve Bank of New York.

Tenreyro was one of the nine-person Monetary Policy Committee members who voted against raising interest rates at the MPC’s last meeting earlier this month. The BoE increased interest rates by half a percentage point, marking its tenth consecutive increase.

GBP/USD key events today

Investors anticipate the US reports on core durable goods orders and pending home sales, which will provide more information about the state of the economy.

GBP/USD technical outlook: Decline to continue below the 1.1951 support

The 4-hour chart shows GBP/USD in a bearish move that has paused at the 1.1951 support level. The bearish move started at the 1.2128 resistance, where bulls failed to go above. The price fell below the 30-SMA, indicating a shift in sentiment to bearish.

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The price faces strong support at the 1.1951 level, but bears are still strong. Therefore, the price will probably break this level and head below the 1.1900 key level.

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