By Samir Al Khoury,
The GBP/USD pair rose to 1.3266 two days ago, marking its highest level since 23 March 2022. The pair is currently trading around 1.3200, having risen by approximately 3.50% since the start of the year.
The headline CPI came in at 2.2% year-on-year, slightly below expectations (2.3%) but above the previous reading (2.0%). The core CPI, which excludes food and energy, also declined to 3.3% year-on-year, falling short of expectations (3.4%) and the previous reading (3.5%).
Bank of England Governor Andrew Bailey stated at the Jackson Hole Symposium that it is too early to declare victory over inflation.
Recent UK economic data indicates that the economy is already improving, as:
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The manufacturing PMI rose to 52.5, exceeding expectations and the previous reading (52.1).
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The services PMI increased to 53.3, surpassing both expectations (52.8) and the previous reading (52.5).
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The unemployment rate fell to 4.2%, lower than expectations (4.5%) and the previous reading (4.4%).
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The industrial production index grew by 0.8% on a monthly basis, outperforming expectations (0.1%) and the previous reading (0.3%).
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The retail sales index grew by 0.5% on a monthly basis, higher than the previous reading (-0.9%).
An important factor contributing to the upward momentum of the GBP/USD pair is the slowdown in the US economy, along with statements from most Federal Reserve members and US Federal Reserve Chairman Jerome Powell, indicating that they will begin monetary easing by reducing interest rates starting from the September meeting next month. Additionally, market expectations suggest a 100 basis point cut in US interest rates this year.
On the technical side, if the GBP/USD pair breaks the pivot point at 1.3207, it may target support levels at 1.3150, 1.3110, and 1.3053. However, if it exceeds the pivot point, it is likely to target resistance levels at 1.3247, 1.3304, and 1.3344. The Relative Strength Index (RSI), currently at 67 points, indicates positive momentum for the GBP/USD pair. Meanwhile, the MACD indicator in blue is surpassing the Signal Line in orange within the positive zone, further indicating bullish momentum for the pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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