Gbpusd consolidates as UK economic indicators improve and US labor market remains stable

GBPUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.01%	1.8 Pips
Week to-date	1.08%	143.7 Pips
May	0.73%	97.5 Pips

Upcoming key events (London Time)

Fri 07:00 AM GBP Retail Sales Volumes (1-mth)

What happened lately

In the United Kingdom, consumer confidence has seen an improvement, with the GfK Consumer Confidence index rising to -20 points in May 2025 compared to -23 points in April 2025. This indicates that consumers are feeling slightly more optimistic about the economic outlook. Additionally, the Retail Price Index for April 2025 showed a significant increase to 1.7%, up from 0.3% in March. For the 12-month period ending in April 2025, the Retail Price Index increased to 4.5% from 3.2% in the previous month. This suggests that there is upward pressure on retail prices, contributing to inflationary trends. The Core CPI Inflation Rate for April 2025 reflected this trend, increasing to 3.8% compared to 3.4% in March. Similarly, the Consumer Prices Index (CPI) over the 12-month period rose to 3.5%, up from 2.6% in March, with the monthly CPI for April 2025 at 1.2%, a rise from 0.3% in the prior month. These figures demonstrate a notable acceleration in inflation, which could prompt the Bank of England to consider tightening monetary policy to curb inflationary pressures.

In the United States, the week ending 17 May saw U.S. Initial Unemployment Insurance Claims drop slightly to 227,000 from the previous 229,000 according to the Department of Labor. This marginal decrease suggests a stable labor market where employment conditions remain favorable, contributing to confidence in the U.S. economic recovery. However, the changes in initial unemployment claims are subtle, indicating only minor labor market improvements.

The recent data from the U.K. and the U.S. may have a mixed effect on the GBPUSD currency pair. The improvement in U.K. indicators, particularly the rising consumer confidence and increased inflation rates, could lend support to the British pound as inflationary concerns might lead the Bank of England to consider raising interest rates, thereby making the pound more attractive. On the other hand, the slightly decreasing U.S. unemployment claims reflect steady economic conditions in the U.S., which could maintain support for the U.S. dollar. Given the marginal changes in unemployment and the positive developments in the U.K. economic outlook, the GBPUSD pair is experiencing consolidation as the market weighs these factors. The slight rise of 0.01% to 1.34176 indicates a relatively balanced reaction, with traders likely awaiting further cues from upcoming economic data, such as the expected high-impact Retail Sales Volumes report in the U.K.

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What can we expect from GBPUSD today?

GBPUSD on Thursday rose 0.01% to 1.34176. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks mixed as the pair is likely to consolidate above 1.33918 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.34408 or trades above daily pivot 1.34163. Break above could target R1 at 1.34421. While to the downside, we are looking at 1.33918 (S1) and daily low of 1.33905 as support levels. GBPUSD need to break on either side to indicate a short-term bias. A break above 1.34408 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is bullish as the pair continued to trade higher and is up by 1.08% over the past few days.

Key levels to watch out:

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