On Friday, GBP/USD was trading steadily near the 1.2915 mark, consolidating after testing annual highs. The strengthening of the pair takes place against the background of the publication of inflation data in the United States, which increased expectations of an early Fed interest rate cut. The consumer price index in June slowed from 3.3% to 3.0% in annual terms, which was below forecasts of 3.1%. On a monthly basis, the indicator decreased by 0.1% after zero dynamics in the previous month, contrary to expectations of an increase of 0.1%. Core inflation also decreased, which disappointed investors along with the revision of the number of new jobs in May. Fed Chairman Jerome Powell stressed the need to take into account the overall economic situation, not just inflation, which increased the likelihood of a rate cut in September and expectations of two cuts by 25 basis points in 2024.
Technical analysis for GBP/USD for today
Data from the UK showed GDP growth of 0.4% in May after zero dynamics in April, which exceeded forecasts of 0.2%. Industrial production expanded by 0.4% year-on-year after declining by 0.7% a month earlier, with a forecast of 0.6%. On a monthly basis, the growth was 0.2%, as expected, after a decrease of 0.9%. The news reduces the likelihood of a rate cut by the Bank of England in August. Representatives of the regulator, including Catherine Mann and Hugh Pill, point to the persistence of price pressure and wage growth, which makes a change in monetary policy unlikely.
On the daily chart, the Bollinger Bands indicator shows steady growth with an expanding price range. The MACD indicator retains a strong buy signal. Stochastic, which had previously declined from the maximum values, is turning up again, indicating the risk of overbought pound in the short term.
Long positions can be opened after a confident breakdown and consolidation of the pair above the 1.2948 level with a target of 1.3050 and a stop loss at 1.2900.
The breakdown and consolidation of the price below the 1.2900 level will indicate a return to the "bearish" dynamics. In this case, we get a sales signal with a target of 1.2817. We will put the stop loss at 1.2948.