Gbp rises as us economic data suggests potential dollar weakness

GBPUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	1.16%	148.1 Pips
Week to-date	0.63%	81.5 Pips
April	0.44%	57.4 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

In March, the United States experienced significant changes in its economic indicators. The U.S. Monthly Treasury Budget Statement showed improvement with a deficit reduction, moving to -$161 billion from a previous -$307 billion in February. This suggests a better fiscal position for the U.S. government. In terms of inflation, the U.S. CPI Inflation Rate excluding food and energy decreased to 2.8% in March from 3.1% in February, reflecting a deceleration in core inflation. Additionally, the overall CPI Inflation Rate for the 12-month period decreased to 2.4% in March, down from 2.8% in February. These figures indicate a cooling in inflationary pressures within the U.S. economy. However, the U.S. labor market showed slight weakness, with initial unemployment insurance claims rising to 223K from the previous 219K for the week ending April 5. This increase suggests a minor uptick in jobless claims.

The recent economic data from the United States, particularly the reduction in inflation rates, may exert downward pressure on the dollar. As inflation cools, the U.S. Federal Reserve may become less inclined to raise interest rates, maintaining a relatively accommodative monetary policy. This situation typically weakens the U.S. dollar, which could have been a factor contributing to the GBPUSD pair’s appreciation on Thursday by 1.16% to 1.29657. A weaker dollar makes the British pound more attractive to investors, thus increasing the GBPUSD exchange rate. Additionally, the upcoming U.S. Producer Price Index (PPI) data excluding food and energy sectors, scheduled for release on Friday, could add further volatility to the currency pair if it signals changes in inflationary trends. Markets will be closely watching for any surprises in this release that could influence future monetary policy expectations.

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What can we expect from GBPUSD today?

GBPUSD on Thursday rose 1.16% to 1.29657. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.3038 with break above could target R2 at 1.31102 or figure level area. While towards the downside, we are looking at daily low of 1.28091 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.29958 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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