- The GBP/USD price analysis shows a brighter outlook for the UK economy.
- The UK economy expanded by 0.1% in the fourth quarter of last year.
- Market participants have lowered expectations for Fed rate cuts.
The GBP/USD price analysis shows a brighter outlook for the UK economy after GDP data revealed an unexpected expansion in Q4 last year. Meanwhile, the dollar remained fragile as the impact of Trump’s tariff threats faded.
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Data on Thursday revealed that the UK economy expanded by 0.1% in the fourth quarter of last year. This figure came above estimates of a 0.1% contraction. The British economy has slowed down significantly, putting pressure on the Bank of England to lower borrowing costs. The upbeat report eased some of that pressure, boosting the pound. Market participants are now pricing 54-bps of rate cuts this year by the Bank of England. If the economy shows more bright spots, rate-cut bets will drop.
On the other hand, market participants have lowered expectations for Fed rate cuts due to upbeat inflation data. Both consumer and wholesale inflation figures came in above estimates, suggesting higher rates for longer in the US. Initially, the more hawkish outlook boosted the dollar.
However, the focus shifted to Trump tariffs, leading to a drop in the US currency. Reports revealed that there will be delays in implementing Trump’s reciprocal tariff. As a result, market participants believe this will give countries time to negotiate better trading deals. Â
GBP/USD key events today
- US core retail Sales m/m
- US retail sales m/m
GBP/USD technical price analysis: Bulls reach a new high above 1.2550
On the technical side, the GBP/USD price has broken above the 1.2550 resistance level to make a new high in the bullish trend. Moreover, the price trades far above the 30-SMA, and the RSI is nearing the overbought level, indicating solid bullish momentum. If the rally continues, the price will reach the 1.2651 level.Â
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However, the price has maintained a shallow uptrend on a larger scale. As a result, when the price forms a new high, it is near the previous high. This means the price returns to the bullish support trendline soon after making a new high.Â
If this is the case, the price will soon reverse to break below the 30-SMA and retest the support trendline. Nevertheless, it will keep making higher highs if it stays above the trendline.
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