GBPUSD falls back into prior trading range as USD maintains bid

POUND STERLING ANALYSIS
- Sterling in focus ahead of lower anticipated UK inflation – BoE up Next
- GBPUSD falls back into prior trading range as USD maintains bid

STERLING IN FOCUS AHEAD OF LOWER ANTICIPATED UK INFLATION – BOE UP NEXT
UK inflation, expected to drop before the Bank of England's monetary policy update, is crucial for achieving the target of 2% inflation. Services inflation remains high with limited progress. The Monetary Policy Committee is unlikely to change their stance even if inflation exceeds estimates. Market expectations favor a rate cut in August, while current rates at 5.25% have strengthened the pound.

The committee's vote split will be closely monitored if the hawks decide to join those calling for a hold on interest rates. The Fed will provide an update on its monetary policy and new economic projections. The dot plot, showing where officials see interest rates at the end of 2024, will be crucial for the market. Both Powell and Bailey are expected to maintain a consistent message.

The image below provides the year-to-date performance of various currencies against the dollar:

GBPUSD FALLS BACK INTO PRIOR TRADING RANGE AS USD MAINTAINS BID
In March, GBP/USD broke out of its trading channel and reached a new high. However, the recent rise in US inflation has strengthened the dollar against several G7 currencies. The GBP/USD pair is now testing the previous high as support. Price action may be volatile due to upcoming central bank meetings, with the Bank of Japan being the only likely mover.

The 50-day simple moving average (SMA) is the next dynamic level of support followed by the bottom of the trading range at 1.2585. Topside resistance appears at 1.2800 followed by the high 1.2893

Comment:

Comment:

GBP/USD still hanging at 1.2442 after UK CPI data

After the UK CPI was released higher than expected, GBP/USD increased from below 1.2420 to above 1.2440 and is currently still hanging at 1.2442.

Comment:

GBPUSD continues to accumulate below the 1.2500 mark

GBPUSD's upward momentum following yesterday afternoon's UK CPI report appears to have paused after testing the 100 hour MA. But at least the buyers have made an effort to break through this resistance in the short term. However, the pair remains blocked at Wednesday's peak near 1.2482.

In the short term, the price trend has turned neutral as the pair is stuck between the 100 and 200 hour MAs. Bulls are also moving towards minor resistance levels and bids are close to 1.2500. Overall, the rebound yesterday afternoon really didn't have much technical significance, and more momentum will be needed to reverse last week's sharp decline.

Comment:

GBP/USD breaks two-week high at 1.2500

GBP/USD rose to a two-week high of 1.2500 since April 12.

GBP/USD has had a pretty good run this week, especially after Monday's decline. The pair tested the 1.2300 level before bouncing back more than 200 pips to 1.2520.

The 38.2 Fib retracement level at 1.2526, now offers some minor resistance. Next is the 200-day moving average at 1.2559 which is a more important level to be cautious of in the coming days.

Comment:

GBP/USD's upward momentum is currently continuing and the pair is currently trading around 1.2500. The reason for the recent increase in the British Pound mainly comes from the latest economic data signaling that the BoE may have to keep interest rates at high levels for a longer period of time.