- GBP/USD remains under pressure amid persistent dollar strength and fading BoE rate hike bets.
- UK CPI surprised to the upside, but markets doubt the BoE will respond with another hike.
- Next week’s focus shifts to UK and US PMIs, both likely to shape GBP/USD’s near-term trajectory.
The GBP/USD price closed lower for the week, sliding from the 1.3485 region toward 1.3400, as the US dollar found fresh demand and UK rate expectations softened.
The major event was the UK CPI print, which came in hotter than expected at 3.6% YoY vs. 3.4% forecast.
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This initially boosted the pound, with traders pricing in a possible late-cycle rate hike by the BoE. However, the rally fizzled after BoE members remained non-committal on future tightening, citing underlying disinflationary trends and weak wage growth.
Across the Atlantic, the US CPI data showed cooling inflation, but not enough to convince markets of a near-term Fed rate cut, especially as Fed Chair Powell’s comments leaned hawkish.
Risk sentiment was further dampened by political headlines, including rumors (later denied) that Trump may replace Fed Chair Powell if elected. The dollar rebounded sharply after the denial, causing GBP/USD to fall.
Upcoming Events for GBP/USD
Next week offers a mix of high-impact UK and US data:
- UK S&P Global PMIs (Wednesday): A soft reading could reinforce concerns over UK economic momentum, weighing on sterling.
- US S&P Global PMIs (Thursday): The PMI readings may reveal the economic strength of the US that may potentially impact the Fed’s monetary policy.
- UK Retail Sales (Friday): The data will feed into broader sentiment about UK demand-side weakness.
Markets will also be watching for Fed speak and BoE commentary, especially after the recent inflation prints.
GBP/USD weekly technical forecast: Bears aiming for 100-day SMA
The daily chart for the GBP/USD shows a weakening momentum as bearish pressure intensifies around 1.3400. However, the current price level coincides with a solid support. The last few daily candles show a bearish momentum, while the 20-day and 50-day SMAs have also turned bearish.
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The next target for the bears lies at the 100-day SMA near the 1.3300 region ahead of the next support at 1.3150. The RSI value is near 40.0, which indicates the probability of further downside cannot be ruled out.
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Saqib Iqbal
