- The pound recovered ahead of important US inflation data later in the day.
- The US economy grew by 3.3% in the fourth quarter, beating expectations.
- With the UK economy showing signs of recovery, the pound has remained strong against the dollar.
Friday’s GBP/USD price analysis suggested a moderately bullish undertone as the pound showed recovery ahead of important US inflation data. The focus is on U.S. consumer spending data, the Federal Reserve’s preferred measure of inflation.
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Meanwhile, data on Thursday showed the US economy grew by 3.3% in the fourth quarter, beating expectations. As a result, the dollar rose and the pound fell.
Strong fourth-quarter economic performance, driven by solid consumer spending, eased fears of a recession. The growth rate for the full year was 2.5%. Additionally, preliminary reports on fourth-quarter gross domestic product revealed further easing of inflationary pressures.
Despite the impressive year-end results, doubts persist that the Fed will begin cutting interest rates in March. However, March remains a possibility due to good inflation data in the GDP report.
The pound remains firm against the dollar, supported by strong UK business activity data earlier this week. Additionally, Goldman Sachs analysts noted that the UK’s growth momentum is improving, driven by consistent services sector expansion, setting the UK apart from other European countries. .
Expectations that the ECB and Federal Reserve will start cutting interest rates before the Bank of England have boosted the pound in recent weeks. The Bank of England is scheduled to meet next Thursday.
GBP/USD major events today
- US Core PCE Price Index Report
GBP/USD Technical Price Analysis: Bulls re-emerge on channel support
On the chart, the pound is trading in a bullish channel and is rising after respecting channel support. The bullish channel is shallow as the price is still trapped in the range between the resistance at 1.2800 and the support at 1.2600. Therefore, the price does not consider the 30-SMA as support or resistance. Similarly, the RSI remains above the important 50 mark, indicating that bears and bulls are vying for control.
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Still, within the channel, price appears to be rising and retesting the channel’s resistance. Such a move would allow the bulls to retest the resistance at 1.2800.
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