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Positive UK Economic Indicators Drive GBP/USD Upward

By Samir Al Khoury,

The GBP/USD price continues its upward trend for the fifth day in a row, recording 1.2761 yesterday, its highest level since March 21, 2024. It is currently trading near the 1.2730 level.

The headline CPI on an annual basis in Britain recorded 2.3% yesterday, higher than expectations (2.1%) but lower than the previous reading (3.2%). The core consumer price index, which excludes food and energy, recorded 3.9% yesterday, higher than expectations (3.6%) but lower than the previous reading (4.2%).

Recent British economic data show that the British economy has actually begun to improve:

The income rate, including bonuses, was 5.7%, exceeding expectations (5.3%) but consistent with the previous reading.

GDP increased in the first quarter of 2024, recording a growth of 0.6%, exceeding expectations (0.4%) and the previous reading (-0.3%).

The industrial production index rose on a monthly basis, recording a growth of 0.2%, exceeding expectations (-0.5%) and the previous reading (1.0%).

The Construction Purchasing Managers’ Index rose, registering a growth of 53.0 points, exceeding expectations (50.4) and the previous reading (50.2).

These positive British economic indicators suggest increasing bets that the Bank of England will maintain interest rates at their current level of 5.00% at the June meeting.

Prime Minister Rishi Sunak has called for early general elections on July 4, which has caused the two-month forward volatility index for the British pound against the US dollar to rise.

An important factor that may put negative pressure on the GBP/USD pair is the strength and flexibility of the US economy. Most Federal Reserve members have indicated that interest rates will remain high for a longer period, and the minutes of the Federal Open Market Committee meeting released yesterday suggested that officials are ready to tighten monetary policy further if necessary. This supports the US dollar against all major currencies.

From a technical perspective, if the pound sterling against the US dollar breaks the pivot point of 1.2726, has the potential to test the support levels of 1.2689, 1.2662, and 1.2625. However, if it exceeds the pivot point, it may test resistance levels of 1.2753, 1.2790, and 1.2817. The Relative Strength Index (RSI), currently at 67 points, indicates positive momentum for the pound sterling against the dollar. The MACD indicator, with its blue line exceeding the orange SIGNAL LINE in the positive zone, also supports this positive momentum.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk.

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