GBP/USD Price Analysis: UK Data Dampens BoE Rate Cut Bets

• The GBP/USD price analysis shows declining expectations for Bank of England rate cuts.

• Pay growth in the UK slowed in the three months to May.

• US retail sales increased by 0.6% in June.

The GBP/USD price analysis shows declining expectations for Bank of England rate cuts. A hotter-than-expected inflation reading and better-than-expected employment figures have pushed experts to predict only one more rate cut. Meanwhile, upbeat US retail sales data eased concerns about an economic slowdown.

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Data on Thursday revealed that pay growth in the UK slowed in the three months to May. Annual wage growth came in at 5.0%. However, the pound rose because it exceeded the forecast of 4.9%. It showed that the labor market was not in quite a terrible state. Therefore, it led to a decline in expectations for BoE rate cuts. 

Goldman Sachs analysts were initially pricing two rate cuts in August and September. However, after an upbeat inflation report and the jobs data, they only expect one cut in August. 

Meanwhile, in the US, retail sales increased by 0.6% in June, beating estimates of 0.1%. The report revealed robust consumer spending, boosting the dollar. It also eased worries about a slowdown caused by Trump’s tariffs. Upbeat inflation and positive sales data have lowered bets for a September Fed rate cut. Traders are now pricing a 54% chance of such a move.

GBP/USD key events today

Traders do not expect any key reports from the US or the UK today. 

GBP/USD technical price analysis: SMA break points to a sentiment shift

On the technical side, the GBP/USD price has broken above the 30-SMA, indicating a shift in sentiment. Bulls have taken the lead after the price paused near the 1.3400 key level. Currently, the RSI is trading above 50, indicating solid bullish momentum. 

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Initially, the price was trading in a solid downtrend. During this time, it kept below the 30-SMA and respected it as a resistance level. However, the 1.3400 support level proved difficult to break. This allowed bulls to take charge. 

Still, the price must detach from the SMA and climb higher to indicate a new direction. In this case, GBP/USD would retest the 1.3600 resistance. Moreover, it must start making higher highs and lows to confirm an uptrend. Otherwise, bears might return to retest the 1.3400 support.

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