empty
15.04.2024 03:04 PM
GBP/USD: Will sterling hold steady against dollar?

The UK economy is recovering from a mild recession in 2023. According to NIESR, UK GDP grew by 0.1% in February, driven by increased production volumes, particularly in the manufacturing and services sectors.

NIESR forecasts GDP to grow by 0.4% in the first quarter and by 0.3% in the second quarter of 2024.

This image is no longer relevant

As for inflation, the main indicator that will help predict the future policy of the Bank of England, Wednesday's data will clear things up. It is expected that UK inflation will ease further, but core inflation will remain above 4% year-over-year. Last Friday, markets were pricing in the first Bank of England rate cut in June. However, the US inflation report, which shifted expectations of a Fed rate cut to September, has scrambled the predictions. There is a high probability that the Bank of England will begin its rate-cutting cycle before the Fed.

In addition to the inflation report, attention should be paid to jobs data to be released on Tuesday. A key point here could be the first decrease in average earnings growth excluding bonuses below 6% year-over-year since last September. If data meets forecasts, and inflation figures are not worse than expected, the GBP/USD pair will have a chance to rise as part of a bullish correction. However, if there are signs of more persistent inflation, a short-term spike in volatility will likely drag the British pound down amid fading expectations that the Bank of England will cut rates before the Federal Reserve.

Historically, the Bank of England has always started its rate adjustments slightly behind the Fed, making August and especially June in current forecasts seem more like fantasy than reality.

The net short position on the pound sterling decreased by 1.2 billion over the reporting week to 2.2 billion. Positioning is still bullish, but the trend towards exiting long positions is increasingly apparent. The price is below the long-term moving average and is heading down.

This image is no longer relevant

As expected, the pound has fallen below the support level of 1.2500. Its further dynamics will depend on how the situation with global risk aversion unfolds. There is no basis to expect a bullish reversal. A possible bullish run is likely to be limited by the resistance level of 1.2500. Technically, the level of 1.2354 can be seen as a target.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD: The Dollar Falls Out of Favor Again

The euro/dollar pair has been climbing for two days, mirroring a general decline in the U.S. dollar. Having briefly regained strength, the greenback is now under pressure again: the U.S

Irina Manzenko 18:07 2025-05-14 UTC+2

AUD/JPY. Analysis and Forecast

The current technical and fundamental setup for the AUD/JPY pair points to short-term pressure from the Japanese yen. However, fundamental factors favoring the Australian dollar help maintain the pair's upside

Irina Yanina 11:28 2025-05-14 UTC+2

USD/JPY. Analysis and Forecast

At the moment, the Japanese yen is showing positive momentum against the U.S. dollar for the second consecutive day.The key factor supporting the Japanese currency has been hawkish comments from

Irina Yanina 11:28 2025-05-14 UTC+2

The Market Is Changing the Rules of the Game

Don't go against the crowd. According to Goldman Sachs and the Federal Reserve, individual investors held $35 trillion worth of U.S. stocks at the end of 2024, equivalent to 38%

Marek Petkovich 09:32 2025-05-14 UTC+2

What to Pay Attention to on May 14? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Wednesday. The only item of note is the second estimate of Germany's Business Activity Index for April. Second estimates typically

Paolo Greco 06:11 2025-05-14 UTC+2

GBP/USD Overview – May 14: Only the Trade Deal Matters

On Tuesday, the GBP/USD currency pair also ended what could only be called disgrace — its decline. On Monday, the U.S. dollar strengthened quite well following a successful first round

Paolo Greco 03:52 2025-05-14 UTC+2

EUR/USD Overview – May 14: The Music Didn't Last Long

The EUR/USD currency pair experienced upward movement for most of Tuesday. One gets used to good news quickly, and the market expected further strengthening of the U.S. dollar. We anticipated

Paolo Greco 03:52 2025-05-14 UTC+2

EUR/USD. And Then They Woke Up: Market Euphoria Over the U.S.-China Trade Truce Fades

The currency market's initial euphoria following the announcement of a temporary trade truce between the U.S. and China has now faded. The early optimism has given way to the sobering

Irina Manzenko 01:23 2025-05-14 UTC+2

Inflation Does the Dollar a Bearish Disservice

One of the few indicators the market occasionally pays attention to is U.S. inflation. After Donald Trump introduced trade tariffs, economists immediately started discussing rising inflation. This conclusion is logical

Chin Zhao 01:14 2025-05-14 UTC+2

The Euro Prepares for Retaliation

Man proposes, God disposes. After the White House imposed strict tariffs on America's Independence Day, there was much discussion about rising inflation and a slowing U.S. economy. However, instead

Marek Petkovich 00:18 2025-05-14 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.