Gbpusd retreats to 1.34215 as mixed US data and easing UK inflation contribute to consolidation

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0%	-0.4 Pips
Week to-date	-1.13%	-153.3 Pips
June	-0.25%	-34.3 Pips

Upcoming key events (London Time)

Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)
Fri 07:00 AM GBP Retail Sales Volumes (1-mth)

What happened lately

The latest economic data from the United States indicates mixed signals. The Federal Reserve’s projections for interest rates show some upward adjustments, with the 2nd-year rate increasing to 3.4% from 3.1%, and the 1st-year rate rising slightly to 3.6% from 3.4%, while the rates for subsequent years are unchanged. The Fed’s decision to keep the Federal Funds Rate steady at 4.5% aligns with these projections. In employment news, initial unemployment claims decreased marginally, suggesting a slight improvement in the labor market. However, key measures of housing activity showed a downturn, with building permits and housing starts both decreasing in May. In addition, there was a decline in monthly retail trade, industrial production, and even in retail trade excluding autos, indicating weaker economic momentum. The only positive note was retail trade’s control group, which saw a minor increase.

In the United Kingdom, inflationary pressures appear to be easing, according to the latest data from the Office for National Statistics. The Core CPI Inflation Rate dropped to 3.5% over the 12-month period, down from 3.8% in April. Similarly, the Consumer Prices Index decreased slightly for both monthly and yearly measures, while the Retail Price Index also witnessed reductions over the same periods. This signals a tempering of inflation, which could influence monetary policy decisions and economic perspectives in the UK.

For the GBPUSD currency pair, the data from both the US and UK point toward a potential period of stability in the exchange rate. With the US economy showing weaker retail and industrial performance paired with slightly rising interest rates, and the UK’s inflation rates decreasing, the currency pair remained in consolidation at 1.34215. Upcoming high-impact events, such as the Bank of England’s interest rate decision and the release of the UK Retail Sales Volumes, could provide more direction. A change in BOE’s rate policy or significant variances in retail sales could act as catalysts for movement in GBPUSD, so traders will be monitoring these developments closely. Furthermore, the unchanged UK interest rates and domestic economic performance will also influence GBPUSD’s trajectory in the coming days.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday dropped 0% to 1.34215. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks mixed as the pair is likely to consolidate above 1.33892 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.34763 or trades above daily pivot 1.34327. Break above could target R1 at 1.34651. While to the downside, we are looking at 1.33892 (S1) and daily low of 1.34004 as support levels. GBPUSD need to break on either side to indicate a short-term bias. A close below 1.34004 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -1.13%.

Key levels to watch out:

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