- The GBP/USD outlook shows unexpected strength in the UK economy.
- Global trade tensions continued, putting downward pressure on the dollar.
- US inflation came in softer than expected at 2.4%.
The GBP/USD outlook shows unexpected strength in the UK economy, which has propelled the pound higher. On the other hand, the escalating trade war between the US and China has dimmed the outlook for US growth. At the same time, downbeat inflation figures in the previous session increased Fed rate cut expectations.
–Are you interested to learn more about South African forex brokers? Check our detailed guide-
Data on Friday revealed that the British economy expanded by 0.5%, well above estimates of 0.1%. The surprise figures revealed a rebound in the economy that might ease pressure on the Bank of England to lower borrowing costs. However, experts believe the impact of Trump’s tariffs will spill into the UK, hurting growth. Therefore, policymakers might wait for more data before deciding on the next move.
Meanwhile, trade tensions continued, putting downward pressure on the dollar. The war between the US and China escalated with higher tariffs. Trump has imposed a total of 145% tariffs on Chinese goods. At the same time, China has gradually increased counter-tariffs on US imports.
Furthermore, Trump’s sudden pause on reciprocal tariffs left many uncertain about the future outlook. As a result, investors are dumping US assets. Elsewhere, data in the previous session showed inflation increasing by 2.4% compared to forecasts of 2.5%. The downbeat report increased pressure on the Fed to cut interest rates.
GBP/USD key events today
- US core PPI m/m
- US PPI m/m
- US preliminary UoM consumer sentiment
- US preliminary UoM inflation expectations
GBP/USD technical outlook: Bulls set sights on the 1.3200 resistance
On the technical side, the GBP/USD price has risen and broken above major resistance zones. Price action shows a whiplash move where the price initially fell sharply before reversing most of the move. The price recently broke above a resistance zone comprising the 1.3000 key psychological level and the 0.618 Fib retracement level.
-If you are interested in forex day trading then have a read of our guide to getting started-
Currently, the price trades far above the 30-SMA, showing bulls have a strong lead. Meanwhile, the RSI trades in the overbought region, showing solid bullish momentum. Therefore, the rally might continue to the next hurdle at the 1.3200 level. However, before climbing, the price might pull back to retest the 30-SMA. A break above the 1.3200 resistance will strengthen the bullish bias as it will make a higher high.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.