**FxWirePro: GBP/USD Inches Up; Bailey’s Speech and US CPI in Focus**
*By FxWirePro staff as originally published by EconoTimes*
**Introduction**
The GBP/USD currency pair experienced cautious gains as financial markets turned their attention to two pivotal events: Bank of England (BoE) Governor Andrew Bailey’s upcoming speech and the anticipated US Consumer Price Index (CPI) data release. The Pound Sterling’s performance against the US Dollar comes amid ongoing volatility, shaped by shifting risk sentiment, central bank expectations, and evolving macroeconomic indicators on both sides of the Atlantic. As global investors position themselves ahead of these high-impact catalysts, understanding the key factors driving GBP/USD becomes critical for traders and market watchers alike.
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**GBP/USD Performance Overview**
– The GBP/USD pair edged higher in early European trading, trading near the 1.2745 level.
– The move marked a reversal from the previous session’s subdued undertone, where the currency drifted in tight ranges amid a lack of fresh catalysts.
– Intraday, cable traded within a contained band, with bullish efforts moderated by uncertainty surrounding imminent risk events.
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**Factors Impacting GBP/USD**
1. **BoE Policy Outlook and Governor Bailey’s Speech**
– Governor Andrew Bailey is scheduled to speak at a key forum, with market participants keenly attuned to any cues regarding the central bank’s future policy path.
– The BoE maintained its policy rate at 5.25 percent during its most recent meeting, opting for a wait-and-see approach amid still-elevated inflation and subdued economic growth.
– Investors are closely parsing Bailey’s comments for signals of a potential shift toward a dovish or hawkish bias, especially after May’s inflation data suggested the disinflationary trend continues but remains sticky in certain sectors.
– Key points to watch:
– Any explicit mention of the BoE’s tolerance for inflation overshooting the 2 percent target
– Remarks on the resilience of UK wage growth and service sector inflation
– Insights on the timing of the first rate cut, with current market pricing pointing toward possible easing in autumn
2. **US CPI Data and Federal Reserve Policy Expectations**
– The latest US CPI reading is expected to provide pivotal guidance for both Federal Reserve policy and overall appetite for the US Dollar.
– Consensus forecasts point to a slight moderation in headline inflation, while the core measure is anticipated to stay elevated, sustaining a complex backdrop for the Fed.
– Major implications of the CPI release include:
– The likelihood of Fed rate cuts in 2024, currently priced at between one to two 25 basis point reductions by year-end
– Market sensitivity to any upside or downside surprise in inflation, which could spark a repricing of Fed expectations and trigger sharp moves in the US Dollar Index (DXY)
– Risk sentiment shifts in equity and bond markets, further feeding through into major FX pairs like GBP/USD
3. **Broader Macroeconomic Landscape**
– Recent data from the UK, including indicators on growth, labor market strength, and consumer spending, remain mixed.
– UK GDP expanded marginally in the first quarter, but forward-looking surveys and high-frequency data signal mounting headwinds.
– In the US, sturdy economic momentum and a resilient labor market have delayed forecasts for the start of Fed easing, keeping the Dollar supported overall.
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**Technical Analysis: GBP/USD Levels to Watch**
– **Immediate Support Levels:**
– 1.2670: Short-term pivot, aligning with previous swing lows
– 1.2610: Deeper support near the 50-day moving average
– **Immediate Resistance Levels:**
– 1.2780: Recent top, capping upside attempts in the last fortnight
– 1.2820: Next major resistance aligning with the May swing high
– **Momentum Indicators:**
– Relative Strength Index (RSI)
Read more on GBP/USD trading.