- The British economy experienced more significant growth than anticipated in June.
- The Bank of England will likely persist in raising interest rates.
- US consumer inflation only increased by 0.2% last month.
Today’s GBP/USD price analysis is slightly bearish. On Friday, the pound rebounded from a three-day decline. This came after data revealed that the British economy experienced more significant growth than anticipated in June. Consequently, there was a modest increase in the pound’s value against the dollar.
Notably, Office for National Statistics data disclosed that the British economic output expanded by 0.5% in June. These exceeded predictions by economists, who had foreseen a growth rate of 0.2%.
Despite this positive performance, Britain remains the sole major advanced economy that has yet to reclaim its pre-COVID levels. Moreover, the unexpectedly robust display of economic growth has bolstered the belief that the Bank of England will persist in raising interest rates.
Attention now shifts to the upcoming release of various UK indicators next week, including inflation figures, wages, and job data.
Meanwhile, the current market outlook suggests anticipation of two more rate increases by the Bank of England. In contrast, the Fed and potentially the European Central Bank are perceived to have concluded their rate-hike cycles.
Elsewhere, data published on Thursday indicated that US consumer inflation only increased by 0.2% last month. This mirrored the growth seen in June. Over the span of 12 months through July, inflation reached 3.2%. In contrast, economists surveyed by Reuters had predicted a 0.2% monthly increase for last month and a year-on-year gain of 3.3%.
GBP/USD key events today
Investors are awaiting the producer price index report from the US that will indicate the state of inflation at the producer level.
GBP/USD technical price analysis: Price recovers, closes beyond crucial 1.2700.
On the charts, GBP/USD has recovered slightly, closing above the 1.2700 key level. However, it remains in a bearish market as the price trades below the 30-SMA. Bearish momentum is also stronger with the RSI below 50.
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Therefore, bulls might not be able to break above the 30-SMA. This would allow bears to return, break below the 1.2700 key level, and retest the 1.2601 support. Bulls can only take over when the price crosses above the 30-SMA and the 1.2775 resistance.
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Saqib Iqbal
