GBPUSD rises for the fourth day in a row and reaches a new ten-month high.
The GBPUSD pair rises for the fourth consecutive day on Friday. Approaching the mid-1.2500s and reaching its highest level since June 2022 during the Asian session. The ongoing positive momentum is being fueled by sustained selling in the US Dollar (USD). Which is being weighed down by expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle.
Expectations of a Fed rate hike pause soon weigh on the USD and lend support.
The bets were boosted by data released on Thursday. Which showed that wholesale inflation in the United States continued to fall and cooled dramatically in March.
In fact, the US Bureau of Labor Statistics reported that the US Producer Price Index (PPI) decelerated sharply from the previous month’s upwardly revised reading of 4.9% to a 2.7% YoY rate. In March – the slowest rate since the previous month’s upward revision. lowest since January 20, 2021. The key inflation gauge fell by 0.5% month on month, while Core PPI, which excludes more volatile food and energy prices, fell by 0.1% month on month and came in at 3.4% for the year ending in March. This follows the softer US CPI report on Wednesday. Indicating that disinflation is proceeding smoothly.
Other data released on Thursday revealed that the number of Americans filing new unemployment claims increased more than expected last week. Reaching its highest level since January 15, 2022. This was interpreted as a sign that labor market conditions were loosening. As higher borrowing costs continued to dampen economic demand. The markets moved quickly. to react, and now expect the Fed to end its monetary tightening after one more hike next month. As a result, the USD falls to a nearly one-year low. Acting as a tailwind for the GBPUSD pair.
The technical setup favors further gains ahead of the US Retail Sales report.
Meanwhile, bullish traders appear unaffected by softer US macro data, which show that economic growth remained flat in February. However, Bank of England (BoE) Chief Economist Huw Pill noted that the current data profile is significantly better than the Monetary Policy Committee’s forecasts from the second half of last year.
However, the recent mixed signals from BoE policymakers regarding future rate hikes warrant some caution before placing aggressive bullish bets around the GBPUSD pair. As traders now turn their attention to the US Retail Sales data can provide a new impetus.
GBPUSD Technical Analysis
Technically, the overnight sustained strength and close above the psychological level of 1.2500 could be viewed as a new trigger for bullish traders.
Furthermore, oscillators on the daily chart are comfortably. In the positive territory and have yet to show signs of overbought Ness. This, in turn, strengthens prospects for a further upward move towards reclaiming the 1.2600 round figure. Enrooted to the 1.2665 swing high in May 2022.
On the other hand, the 1.2500 level now appears to be protecting the immediate downside. Any subsequent decline is more likely to attract new buyers and to be limited near the 1.2450-1.2440 strong horizontal resistance breakpoint. Which has now turned support.
However, some follow-through selling could cause the GBPUSD pair to fall. Further below 1.2400. Round figure and look for the next relevant support near 1.2375-1.2370.
