- The United States announced higher-than-expected Producer Price Index (PPI) numbers.
- Investors expect the Fed to cut interest rates by only 44 basis points in 2024.
- UK wages, excluding bonuses, increased by 6.0% in the first quarter of 2024.
GBP/USD price analysis shows bullish optimism as the dollar weakens due to US wholesale inflation reports. All eyes are now on the impending release of US consumer inflation statistics. Meanwhile, the pound rallied after plunging on dovish policy comments.
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On Tuesday, the United States released better-than-expected producer price index (PPI) numbers, showing that domestic inflation remains high. Wholesale inflation rose 0.5% in April, beating expectations for a 0.3% rise. Following this report, the market lowered expectations for the Fed’s interest rate cuts. Investors currently expect interest rates to fall by only 44 basis points in 2024. The report initially caused the dollar to soar. However, this move has since reversed, showing that investors were pricing in such an outcome. So when that happened, they were ready to book a profit, leading to a drop in the dollar. Investors are currently awaiting the CPI report.
Meanwhile, employment statistics in the UK revealed the strength of the labor market. However, there are signs that the situation is easing and the Bank of England could start cutting interest rates. In particular, wages minus bonuses increased by 6.0% year-on-year in the first quarter of 2024. This beat expectations for a 5.9% rise and boosted the pound.
However, the gains reversed after Bank of England economist Hugh Pill said the central bank could be ready to cut interest rates by the summer.
GBP/USD major events today
- US CPI Report
- US Retail Sales Report
- Empire State Manufacturing Index
GBP/USD Technical Price Analysis: Price revisits 1.2600 level with new momentum
On the technical side, GBP/USD price is retesting the 1.2600 resistance level after finding support at the 30-SMA. The bullish bias is strong, with the price well above the SMA and the RSI close to overbought territory.
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Price resumed its bullish trend after finding support at the 0.5% Fib retracement level. The Bulls swallowed the candle and broke above the SMA. We then confirmed the new bias by retesting the SMA as support. Therefore, the price is likely to rise above 1.2600 and retest the psychological level of 1.2700.
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https://www.forexcrunch.com/blog/2024/05/15/gbp-usd-price-analysis-dollar-softens-post-ppi-eyes-on-cpi/