UK/US Trade Deal Hopes
The British Pound continues to strengthen on Tuesday with GBPUSD today breaking out to fresh highs for the year. Bullish sentiment is being bolstered this week by news that the UK and US look likely to do a trade deal, allowing the UK to avoid being subject to tariffs. JD Vance expressed his optimism this week over the two countries striking a deal. The news which comes on the back of last week’s better-than-forecast UK GDP print means the near-term outlook for the UK might not be as dim as previously thought.
Wage Growth & Inflation Data
GBP is also being lifted today by the latest UK jobs data. Wages growth was seen holding steady at 5.6%. The data creates some pushback against near-term BOE rate cut expectations. Looking ahead, traders will now be watching tomorrow’s UK CPI data which will be seen as make or break for the chances of a May rate cut. If data comes in above the 2.7% forecast, a cut next month looks unlikely with GBP expected to rally firmly as a result. However, if data surprises to the downside, this could see near-term rate cut expectations jumping, putting pressure on GBP. Given the current GBP strength we’re seeing, however, it would likely take a meaningful downside surprise to cause GBP to weaken here.
Technical Views
GBPUSD
The rally in GBPUSD has seen the market trading up to test the 1.3264 level and bull channel highs. This is a strong resistance zone for the pair and while we might see some corrective action, the outlook remains bullish here with 1.3427 the next target for bulls, in line with bullish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.