CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• BRC Like-For-Like Retail Sales the biggest-hitting UK data this week.
• US NFP looms ahead on Friday, ADP employment preview on Wednesday.
• Fed rate cut hopes are on the rise once again, but Fed Chair Powell remains a threat.

GBP/USD climbed into the 1.2700 handle on Monday before falling back, paring away some of the day’s gains but hitting the rollover higher than it started.

The UK sees only a thin showing on the economic calendar this week, and another US Nonfarm Payrolls (NFP) labor print on Friday sees investors gearing up for another kick at the can on how soon the Federal Reserve (Fed) will begin cutting interest rates.

Tuesday’s UK BRC Like-For-Like Retail Sales for the year ended February are expected to print at 1.6% YoY versus the 1.4% previous. On the US side for Tuesday, the ISM Services Purchasing Managers Index (PMI) for February is forecast to tick lower to 53.0 from the previous month’s 53.4.

US labor figures feature heavily this week, with ADP Employment Change on Wednesday followed by Friday’s NFP report. ADP Employment Change is forecast to jump to 150K for February versus the previous 107K, while this Friday’s NFP is currently forecast to fall back to 200K from the previous 353K.

Fed Chairman Jerome Powell will also be making an appearance this week, testifying before the US Congress’ House Financial Services Committee regarding the Fed’s Semi-Annual Monetary Policy Report. Plenty of soundbites and headlines are expected over the two day central bank showing, beginning on Wednesday and wrapping up Thursday.

GBP/USD technical outlook

GBP/USD found a hard technical barrier at the 1.2700 handle on Monday, but the pair managed to eke out a thin gain on the day, gaining around a quarter of a percent by the closing bell.

The pair continues to find technical support from the 200-day Simple Moving Average (SMA) at 1.2578, but near-term technical resistance at 1.2700 is capping off bullish momentum and preventing a topside recovery into last December’s peak bids near 1.2800.

GBP/USD hourly chart

GBP/USD daily chart

GBP/USD stretches its upside. Economists at Scotiabank analyze the pair’s outlook.

Clear and sustained push through 1.2710 should see gains extend a little more

• GBP/USD attracts buyers for the second straight day amid subdued US Dollar price action.
• BoE Chief Economist Huw Pill's hawkish remarks underpin the GBP and remain supportive.
• Bets that the Fed will keep rates higher for longer to limit the USD losses and cap the pair.

The GBP/USD pair builds on Friday's goodish rebound from the 1.2600 round figure, or a one-and-half-week trough and gains some positive traction for the second successive day on Monday. The momentum lifts spot prices to a multi-day peak, around the 1.2660-1.2665 area during the Asian session and is sponsored by a combination of factors.

The British Pound (GBP) draws support from the Bank of England (BoE) Chief Economist Huw Pill's hawkish remarks on Friday, saying that the first cut in the key interest rate is still some way off. The US Dollar (USD), on the other hand, remains depressed in the wake of Friday's disappointing US macro data and less hawkish remarks by Federal Reserve (Fed) officials. Apart from this, the recent risk-on rally across the global equity markets further undermines the safe-haven Greenback, which, in turn, lends some support to the GBP/USD pair.

The downside for the USD, however, seems limited amid growing acceptance that the Fed will keep interest rates higher for longer. Traders might also refrain from placing aggressive directional bets ahead of this week's important US economic releases, including the closely-watched Nonfarm Payrolls (NFP) on Friday and Fed Chair Jerome Powell's semi-annual congressional testimony on Wednesday and Thursday. This, in turn, warrants some caution before positioning for any further near-term appreciating move for the GBP/USD pair.

In the meantime, there isn't any relevant market-moving data due for release on Monday, either from the UK or the US, leaving spot prices at the mercy of the USD price dynamics. That said, the US bond yields, along with the broader risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.

• GBP/USD rallies back into technical midrange near 1.2650.
• Broad-market risk appetite knocks Greenback lower.
• US ISM Manufacturing PMI fell back in February, price pressures easing.

GBP/USD caught an intraday bump on Friday after a surprise miss in the US ISM Manufacturing Purchasing Managers Index (PMI) sparked renewed risk appetite on the back of fresh hopes for easing inflation to kick off a round of rate cuts from the Federal Reserve (Fed). 

ISM Manufacturing PMI: declines to 47.8 in February vs. 49.5 expected

The US ISM Manufacturing PMI for February slid to 47.8 versus the forecast uptick to 49.5 from the previous month's 49.1. Easing PMI sentiment is helping to bolster renewed hopes for rate cuts from the Fed, with rate trim expectations further bolstered by the Fed's latest Monetary Policy Report, wherein the Fed reaffirmed its stance that inflation is back on its way to the top of the 2% target band.

Fed's MPR: Inflation expectations are broadly consistent with 2% goal

This week and next week both see a thin showing in economic figures from the UK to drive the Pound Sterling, but traders will be pivoting to face next week's hefty labor data from the US. Next Tuesday sees the Services component of the ISM PMI figures, followed by the ADP Employment Change preview for February on Wednesday, and next week will close with a bang with the latest US Nonfarm Payrolls (NFP) print.

GBP/USD technical outlook

GBP/USD caught a ride on Monday, bumping back into the 200-hour Simple Moving Average (SMA) near 1.2650 after falling to a near-term low at the 1.2600 handle. Near-term technical momentum has been flat to bearish in the pair, and Thursday's peak just above 1.2680 remains a key technical ceiling for bullish momentum.

GBP/USD struggled to push over 1.2700 this week, getting rejected from the key handle multiple times before falling back to familiar technical levels. Bullish support is still priced in from the 200-day SMA near 1.2576.

GBP/USD hourly chart

GBP/USD daily chart

Expectations on the March 6 UK Budget may slowly start to feed into the Pound Sterling (GBP) price action. Economists at ING analyze how the Spring Budget could impact the GBP.

GBP would again come under pressure were Chancellor Hunt to misread the mood of gilt investors

Sterling remains rangebound against the USD but dips to the 1.2600 area remain well-supported, economists at Scotiabank say.

Cable to strengthen and regain the mid/upper 1.2700s on a break past 1.2680/1.2685

• GBP/USD stages a modest recovery from a one-week low amid a modest USD downtick.
• Bets that the Fed will not cut rates before the June policy meeting should limit USD losses.
• Traders now look to the US ISM PMI and Consumer Sentiment Index for a fresh impetus.

The GBP/USD pair attracts some buying during the Asian session on Friday and for now, seems to have snapped a two-day losing streak to a one-week low, around the 1.2615-1.2610 region touched the previous day. Spot prices currently trade around the 1.2630-1.2635 zone and remain at the mercy of the US Dollar (USD) price dynamics.

The US Personal Consumption Expenditures (PCE) Price Index released on Thursday showed that annual inflation in January was the lowest in three years and reaffirmed bets for an eventual rate cut by the Federal Reserve (Fed). This, in turn, fails to assist the USD Index (DXY), which tracks the Greenback against a basket of currencies, to capitalize on the previous day's bounce from a technically significant 200-day Simple Moving Average (SMA). Apart from this, the prevalent risk-on environment is seen as another factor undermining the Greenback's relative safe-haven status and lending some support to the GBP/USD pair.

The British Pound (GBP), on the other hand, draws support from the fact that the Bank of England (BoE) policymakers have been trying to push back against market expectations for early interest rate cuts. This further contributes to the bid tone surrounding the GBP/USD pair. That said, growing acceptance that the Fed will wait until the June policy meeting before lowering borrowing costs, bolstered by hawkish remarks by several FOMC officials, remains supportive of elevated US Treasury bond yields. This, in turn, should act as a tailwind for the USD and hold back bulls from placing aggressive bets around the GBP/USD pair.

Market participants now look to the release of the final UK Manufacturing PMI, which, along with a scheduled speech by the BoE Chief Economist Huw Pill, could provide some impetus. Later during the early North American session, traders will take cues from the US ISM Manufacturing PMI, the revised Michigan Consumer Sentiment Index and Fed Speak. Apart from this, the US bond yields, and the broader risk sentiment will drive the USD and produce short-term opportunities around the GBP/USD pair. Nevertheless, spot prices seem poised to register weekly losses ahead of important US macro data scheduled at the beginning of a new month.

• GBP/USD remains on the defensive around 1.2625 amid the firmer USD.
• The US Core PCE rose by 2.8% YoY in January versus 2.9% prior, in line with the market consensus.
• Investors will monitor the UK Nationwide Housing Prices and the final S&P Global Manufacturing PMI on Friday.

The GBP/USD pair extends its downside below the mid-1.2600s during the early Asian session on Friday. The renewed US Dollar (USD) demand above the 104.00 psychological mark drags the major pair lower. Investors will shift their focus to the final US S&P Global Manufacturing PMI for February. At press time, GBP/USD is trading at 1.2625, adding 0.01% on the day.

Data released from the US Bureau of Economic Analysis (BEA) on Thursday reported that the Personal Consumption Expenditure (PCE) Price Index eased from 2.6% to 2.4% YoY, in line with the market expectation. Additionally, the Core PCE, the Federal Reserve's (Fed) preferred inflation gauge, rose by 2.8% YoY in January compared to the December’s reading of. 2.9, matching with the consensus.

Atlanta Fed President Raphael Bostic said that the recent inflation data indicates the road back to the central bank’s 2% inflation target will be “bumpy.” Meanwhile, Chicago Fed President Austan Goolsbee, stated that he expects the first rate cuts later this year, but he cannot specify the timeline.

The market anticipate the Fed to begin cutting the interest rate by summer. Nonetheless, the timing of the easing policy is uncertain as inflation could be more stubborn than expected and it could convince the Fed to stay high on rate. This, in turn, might lift the Greenback and weighs on the GBP/USD pair.

On the other hand, the speculation that the Bank of England (BoE) will pivot to rate cuts later than the Fed might provide some support to the Pound Sterling (GBP). The BoE Deputy Governor Dave Ramsden said he wants to see how long inflation will remain elevated before considering a shift in monetary policy stance.

Looking ahead, the UK Nationwide Housing Prices is due on Friday. On the US docket, the final S&P Global Manufacturing PMI and the final Michigan Consumer Sentiment will be released. Furthermore, the Fed’s Williams, Logan, Waller, Bostic, Daly, and Kluger are set to speak.

GBP/USD holds neutral 1.2600/1.2700 range. Economists at Scotiabank analyze the pair’s outlook.

Cable will have to move significantly from current levels to boost directional momentum

• GBP/USD gains some positive traction on Thursday amid a modest USD weakness.
• The Fed’s hawkish outlook to limit the USD losses and cap the upside for the pair.
• Traders might also prefer to wait for the release of the crucial US PCE Price Index.

The GBP/USD pair builds on the previous day's goodish rebound from the weekly low and attracts some follow-through buying during the Asian session on Thursday. Spot prices currently trade above mid-1.2600s and draw support from a modest US Dollar (USD) downtick, though lack bullish conviction.

The USD bulls prefer to wait on the sidelines and look to the release of the US Personal Consumption Expenditure (PCE) Price Index for cues about the Federal Reserve's rate-cut path before placing fresh directional bets. In the meantime, expectations that the Fed will keep interest rates higher for longer in the wake of sticky inflation and a still-resilient US economy should act as a tailwind for the buck. Apart from this, a slight deterioration in the global risk sentiment is seen benefitting the Greenback's safe-haven status and contributing to capping gains for the GBP/USD pair.

Meanwhile, the Bank of England (BoE) policymakers have been trying to push back against market expectations for early interest rate cuts. In fact, BoE Deputy Governor Dave Ramsden said on Tuesday that he wants more evidence that inflationary pressures were easing to consider a cut in interest rates. Adding to this, BoE's Catherine Mann said on Wednesday that the spending habits of wealthy Britons make it harder to curb inflation. The markets, however, seem convinced that the BoE will start cutting interest rates soon, which could further act as a headwind for the GBP/USD pair.

Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before positioning for the resumption of the GBP/USD pair's two-week-old uptrend. There isn't any relevant market-moving economic data due for release from the UK on Thursday, leaving spot prices at the mercy of the USD Price dynamics. Apart from the key US inflation data, the US economic docket also features the release of the usual Weekly Initial Jobless Claims, the Chicago PMI and Pending Home Sales. This, along with Fed speak, should influence the USD demand.

• GBP/USD loses traction near 1.2660 in Thursday’s early Asian session. 
• US economic growth was slightly weaker than previously forecast in the fourth quarter of 2023. 
• BoE policymakers said they need more incoming data to consider before lowering interest rates.
• The US Core Personal Consumption Expenditures Index (Core PCE) will be in the spotlight on Thursday. 

The GBP/USD pair bounces off the multi-day lows near 1.2620 and recovers to 1.2660 during the early Asian session on Thursday. The renewed US Dollar (USD) demand ahead of the key US event weighs on the major pair. Investors await the US January Personal Consumption Expenditures Price Index (PCE) on Thursday for fresh impetus. At press time, GBP/USD is trading at 1.2660, down 0.01% for the day.

The New York Federal Reserve (Fed) President John Williams said on Wednesday that even though there's still some distance to cover in achieving the Fed 2% inflation target, the door is opening to interest rate cuts this year, depending on how the data come in. 

The recent inflation data has caused financial markets to push back the timing of the first rate cut, which provides some support for the Greenback. Nonetheless, the US PCE data due later in the day might offer some hints about the inflation trajectory in the United States. 

On Wednesday, the US Gross Domestic Product (GDP) for the fourth quarter grew at a 3.2% annualized rate from 3.3% in the previous reading, according to the US Bureau of Economic Analysis (BEA). The figure came in weaker than the estimation of a 3.3% expansion for Q4. 

The Bank of England (BoE) policymakers said they need more evidence that inflation will come down to the 2% target before they decide to lower the key lending rates. The BoE expects year-over-year inflation to decline from 4% last month to 2% in the second quarter of this year, but then rise to 3% by the end of 2024 as the disinflationary effect of lower natural gas prices fades.

Looking ahead, traders will keep an eye on the Fed's preferred inflation measure, the Core Personal Consumption Expenditures Index (Core PCE), due on Thursday. Additionally, the UK Nationwide Housing Prices and Consumer Credit will be released later in the day. 

GBP/USD slides in line with peers but rebound from low looks constructive, economists at Scotiabank say.

Support is 1.2580/1.2590

• GBP/USD meets with some supply on Wednesday amid a modest pickup in the USD demand.
• The mixed technical setup warrants caution for bears and before positioning for further losses.
• A sustained move beyond the 1.2700 mark is needed to support prospects for additional gains.

The GBP/USD pair comes under heavy selling pressure following the previous day's two-way directionless price moves and drops to the 1.2665 region during the Asian session on Wednesday.

Despite Tuesday’s disappointing release of the US Durable Goods Orders, investors seem convinced that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates. This helps revive the US Dollar (USD) demand, which, in turn, is seen as a key factor exerting downward pressure on the GBP/USD pair. The downfall, meanwhile, seems unaffected by the overnight hawkish remarks by the Bank of England (BoE) Deputy Governor Dave Ramsden, saying that he wanted more evidence that inflationary pressures were easing to consider a cut in interest rates.

From a technical perspective, the recent repeated failures to find acceptance above the 50-day Simple Moving Average (SMA) and a slide below the 23.6% Fibonacci retracement level of a nearly two-week-old uptrend favours bearish traders. That said, oscillators on the daily chart are holding in the positive territory and warrant some caution. Hence, any subsequent decline is more likely to find decent support near the 1.2645 area, representing 38.2% Fibo. level. A convincing break below, however, will set the stage for a further near-term depreciating move for the GBP/USD pair.

Spot prices might then accelerate the slide towards the 50% Fibo. level, around the 1.2625 region, before dropping to the 1.2600 mark, or the 61.8% Fibo. level, and the 1.2575 confluence. The latter comprises the 78.6% Fibo. level and the very important 200-day SMA, which if broken decisively will be seen as a fresh trigger for bearish traders and prompt aggressive technical selling around the GBP/USD pair.

On the flip side, momentum beyond the 50-day SMA might continue to confront some resistance ahead of the 1.2700 mark. Some follow-through buying beyond last week's swing high, around the 1.2710 area, however, could trigger a short-covering rally and lift the GBP/USD pair back towards the monthly swing high, around the 1.2770 supply zone. A sustained strength beyond the latter has the potential to lift spot prices beyond the 1.2800 mark, towards the December 2023 peak, around the 1.2825-1.2830 region.

GBP/USD daily chart

• GBP/USD trades sideways around 1.2685 on the consolidation of USD. 
• The US January Durable Goods Orders arrived at 6.1% versus -0.3% prior; Consumer Confidence Index came in worse than expected. 
• BoE’s Ramsden said inflationary pressures persisted, and he needed more data before adjusting the policy stance.
• Investors await the US GDP Q4 growth numbers and the BoE’s Mann speech on Wednesday. 

The GBP/USD pair trades in a tight range below the 1.2700 psychological mark during the early Asian session on Wednesday. The US GDP growth number for the fourth quarter will be due later in the day ahead of the Bank of England's (BoE)’s Catherine Mann speech. The major pair currently trades near 1.2685, up 0.03% on the day. 

On Tuesday, US January Durable Goods Orders fell 6.1% from a 0.3% drop in December, worse than the market estimation of a 4.5% decline. The Goods New Orders ex-defense, a proxy for capital spending, rose +0.1% MoM, in line with expectations. Finally, the US Consumer Confidence Index by the Conference Board came in at 106.7, below the market consensus of 115.0.

Investors bet that the first rate cut will come in the June meeting, down from expectations for a rate cut as early as March, according to the CME FedWatch Tool. The US Personal Consumption Expenditure Index (PCE) for January will be due on Thursday and might offer some hints about the trajectory of inflation over time. The PCE inflation figure is expected to rise 0.3% MoM in January from 0.2% in December. 

On the other hand, the Bank of England (BoE) Deputy Governor Dave Ramsden said on Tuesday that inflationary pressures persisted, and he needed more data about how long they were expected to last before changing the BoE's policy stance. The BoE forecasts that inflation will return to its 2% target in the second quarter of 2024 but will subsequently rise to around 2.75% later this year. The financial markets anticipate the UK central bank to begin cutting interest rates in August.

Looking ahead, market players will keep an eye on the US Gross Domestic Product Annualized for the fourth quarter (Q4) and preliminary Goods Trade Balance. Also, the Fed’s Bostic, Collins, Williams, and BoE’s Mann are set to speak later on Wednesday. Traders will take more cues from the data and find trading opportunities around the GBP/USD pair. 

• GBP/USD lacked momentum on Tuesday.
• US data missed the mark, traders await US GDP.
• US PCE inflation also due this week for Fed watchers.

GBP/USD cycled around 1.2680 on Tuesday as markets look for a fresh push from the Federal Reserve (Fed) with investors steadily pushing away from elevated rate cut bets. US Gross Domestic Product (GDP) and Personal Consumption Expenditure Price Index (PCE) inflation numbers are due this week.

UK data remains thin this week, and markets are focusing on key figures to update rate cut expectations from the Fed. 

US Durable Goods Orders declined more than expected in January, printing at -6.1% versus the expected -4.5%. December’s Durable Goods Orders were revised to -0.3% from 0.0%.

US annualized GDP for the fourth quarter will print on Wednesday and is expected to print flat, holding at the previous 3.3% for the year ended in Q4. US Core PCE Price Index inflation, slated for Thursday, is expected to tick down for the annualized figure to 2.8% from 2.9%, while the MoM figure is expected to heat up in January to 0.4% from the previous 0.2%.

As the Fed’s favored inflation measure, PCE will draw plenty of investor’s eyes as they hope for signs of rate cuts from the US central bank. A too-tight labor market, a stubborn “last mile” on inflation, and a domestic US economy that refuses to slip into a recession have weighed on trader hopes for a Fed rate trim.

According to the CME’s FedWatch Tool, money markets are expecting around 75 basis points in rate cuts through 2024, bringing rate expectations in line with the Fed’s own projections for the first time since late 2023.

GBP/USD technical outlook

GBP/USD continues to churn at the intraday level, cycling 1.2650 trapped between technical resistance at the 1.2700 handle and rising near-term technical support from the last swing low into 1.2550.

GBP/USD has run aground on the 50-day Simple Moving Average (SMA), but the pair is holding onto bull territory after a double bounce from the 200-day SMA near 1.2575.

GBP/USD hourly chart

GBP/USD daily chart

GBP/USD is registering a very mild net gain on the day so far, its sixth in succession. Economists at Scotiabank analyze the pair’s outlook.

Cable should remain supported on minor dips

• GBP/USD posts modest gains near 1.2683 in Tuesday’s early European session. 
• The pair maintains a bullish outlook above the key EMA; RSI indicator lies above the 50 midlines.
• The first upside barrier will emerge at the 1.2700 mark; the initial support level is seen at 1.2640.

The GBP/USD pair remains capped under the 1.2700 barrier during the early European session on Tuesday. A testimony to the UK Treasury committee by Bank of England (BoE) Governor Andrew Bailey and other policymakers last week sparked speculation of a delay in rate cuts, which boost the Pound Sterling (GBP) and create a tailwind for the GBP/USD pair. The pair currently trades around 1.2683, up 0.01% on the day. 

GBP/USD keeps the bullish vibe unchanged as the major pair is above the key 100-period Exponential Moving Average (EMA) on the four-hour chart. The upward momentum is backed by the Relative Strength Index (RSI), which lies above the 50 midlines, supporting the buyers for the time being.

The potential resistance level will emerge at the 1.2700 mark, portraying the confluence of the upper boundary of the Bollinger Band, a psychological round figure, and a high of February 26. A bullish breakout of this level will expose a high of January 31 at 1.2750. The additional upside filter to watch is a high of January 12 at 1.2585. 

On the flip side, the first downside target for GBP/USD is seen at the 100-period EMA and the lower limit of the Bollinger Band at 1.2640. The key contention level for the major pair is located at the 1.2600–1.2605 region, representing the psychological mark and a low of February 21. A break below the latter will pave the way to a low of December 11 at 1.2535. 

GBP/USD four-hour chart

• GBP/USD trades in positive territory for the sixth consecutive day near 1.2685 on Tuesday. 
• BoE’s Bailey did not indicate a specific timeline for rate cuts, but the bank was on a path toward lowering rates. 
• Fed’s Williams said the central bank is on track to cut rates later this year, despite upbeat inflation and labor market data in January.

The GBP/USD pair extends the rally below the 1.2700 psychological barrier during the early Asian session on Tuesday. The FOMC minutes indicated that the Fed had reaffirmed a data-driven approach, leading to a more dovish outlook, which weighs on the US Dollar (USD) and creates a tailwind for the pair. At press time, GBP/USD is trading at 1.2685, gaining 0.02% on the day. 

A testimony to the UK Treasury committee by Bank of England (BoE) Governor Andrew Bailey and other policymakers last week prompted speculation of delay rate cuts, which lift the Pound Sterling (GBP). Bailey said that he would not forecast how many cuts there would be, but the bank was on a path toward lowering rates. 

He further stated that the central bank has shifted from a stance of how tight policy needs to be, and how high rates need to be, to how long the BoE needs to retain this stance to achieve sustained inflation. The markets have priced in four rate cuts at the end of this year after the BoE decided to maintain the interest rate unchanged at 5.25% earlier this month.  

On the other hand, New York Federal Reserve (Fed) President John Williams said last week that the central bank is on track to cut interest rates later this year, despite stronger-than-expected inflation and labor market data in January. However, Fed Chair Jerome Powell highlighted last week that a March cut is highly unlikely, while several Fed officials prefer to wait for additional evidence of inflation data before lowering the interest rate. Investors have priced in the first rate in the June meeting or later. 

Later this week, the US Gross Domestic Product Annualized for the fourth quarter (Q4) will be due, which is forecast to remain steady at 3.3%. On Thursday, the US Personal Consumption Expenditures Price Index (PCE) will be in the spotlight. Traders will take cues from the data and find trading opportunities around the GBP/USD pair. 

GBP/USD is unfolding a sideways consolidation. Economists at Société Générale analyze the pair’s technical outlook. 

1.2775/1.2820 topside hurdle for bulls