- The significant decline in the US dollar following lower-than-expected inflation numbers has helped bulls push the GBP/USD rate towards the psychological resistance level of 1.3000, the highest for the pair in a year, confirming the strength and control of the bulls in the trend.
- The GBP/USD rate began this week's trading, stabilizing around the 1.2973 level, awaiting any new developments.
Among the economic data released, the UK will attract the most attention in the region. The latest consumer price reading on Wednesday may show that UK services inflation slowed for the fifth month in June to 5.6% – still well above the 2% target set by policymakers. Also, the latest wage figures will be released on Thursday, with expectations that regular wage growth will fall below 6% for the first time in 20 months, in numbers covering the quarter ending in May. Wednesday will also see the so-called King's Speech, which Prime Minister Keir Starmer will use to highlight his new government's efforts to stimulate economic growth in the UK.
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Meanwhile, June retail sales, due on Friday, are likely to fall, while other data on the same day will mark the first reading of public finances that Chancellor of the Exchequer Rachel Reeves has seen since taking office. Generally, the week’s figures are the last major releases before the Bank of England’s decision on August 1, when officials will decide whether to cut interest rates for the first time since the start of the pandemic.
According to reliable trading platforms, the gains point to tailwinds behind sterling as we move into the early stages of the second half of 2024. In fact, sterling is the best performing G10 currency for 2024 thanks to the recent decline in the US dollar amid growing expectations for a September Fed rate cut.
Analysts commented on the pound's performance, saying, "The pound sterling has outperformed all its major peers this year amid expectations that the Bank of England will have to keep interest rates at their highest levels in 16 years for longer due to the unexpectedly strong economic recovery, persistent concerns about stubborn services inflation, and wage pressures."
According to the results of the economic calendar, the British economy grew (0.4%) in June, which is double the rate economists had expected, meaning that the second quarter is on track to record a strong 0.7% advance. Furthermore, some economists believe that by the end of the year, Britain will have recorded an annual increase of 1.5% in the G10, which would put it near the top of the G7. Overall, the recent gains in the pound also reflect a decline in expectations that the Bank of England will cut interest rates on August 1. For his part, Hugh Bell, the Bank of England’s chief economist, said that the timing of the first interest rate cut remains in question due to stubborn levels of service sector inflation.
Technical forecasts for the GPB/USD pair today:
So far, the bullish bounce in GBP/USD trading pair is still the strongest. As we mentioned before, the psychological resistance of 1.3000 will remain the culmination of the bulls' control over the trend. Meanwhile, the technical indicators will move towards strong overbought levels. Unless the sterling gains new positive momentum, the currency pair may be exposed to profit-taking sales at any time. On the other hand, according to the performance on the daily chart below, the support level of 1.2775 will remain a threat to the current bullish bounce.
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