- UK retail gross sales rose 0.5% in July after dropping by 0.9% the earlier month.
- UK GDP information revealed an anticipated 0.6% progress in Q2.
- All focus might be on Powell’s speech on the Jackson Gap symposium.
The GBP/USD outlook is bullish because the pound rallies amid a drop in BoE price reduce expectations. However, the greenback remained weak as traders totally priced in a 25 bps Fed price reduce in September.
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The pound has been bullish since final week when information confirmed that the UK economic system was regular. Notably, UK retail gross sales rose 0.5% in July after dropping by 0.9% the earlier month. The gross sales figures got here after GDP information revealed an anticipated 0.6% progress in Q2.
A gentle economic system has lowered the possibilities that the Financial institution of England will implement one other price reduce quickly. The chance of a September price reduce fell to 37%. On the similar time, traders count on 43 bps cuts in 2024. As BoE price reduce expectations fall, markets totally worth a Fed reduce in September.
The tides shifted final week after information confirmed a average enhance in inflation, as anticipated. Though probabilities of a 50 bps reduce dropped, merchants elevated their bets on a smaller price reduce. Fed policymakers are extra assured that inflation will attain the two% goal. Subsequently, traders imagine they are going to begin supporting the primary reduce in September.
Consequently, all focus might be on the Jackson Gap symposium, the place Powell will communicate. A extra dovish speech will additional weigh the greenback and increase the pound. On the similar time, the FOMC coverage minutes would possibly comprise clues about policymakers’ positions concerning price cuts.
GBP/USD key occasions in the present day
No key reviews are scheduled for in the present day. Consequently, the pound will in all probability lengthen final week’s transfer.
GBP/USD technical outlook: Bulls aiming for 1.3000 degree
On the technical facet, the GBP/USD worth is on a steep, bullish transfer properly above the 30-SMA. On the similar time, the RSI has climbed to the overbought area, displaying a surge in bullish momentum.
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The rally pushed the worth above a strong resistance comprising the 1.2900 degree and the 0.618 Fib. If this transfer continues, the worth will attain the 1.3000 key psychological degree. Nonetheless, if bulls get exhausted earlier than then, GBP/USD would possibly pull again to retest the 30-SMA help earlier than climbing.
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