**GBP/USD Price Forecast: Pound Sterling at 1.351 as Dollar Loses Ground**
*Original Author: Tim Clayton, Currency News UK*
## Introduction
The foreign exchange markets have seen considerable volatility in recent months, with the GBP/USD currency pair drawing significant attention from traders and investors alike. As the pound sterling consolidated gains against the US dollar, hitting the 1.351 mark, questions arise regarding the sustainability of this uptrend and the macroeconomic factors supporting the move. In this detailed analysis, we explore the current GBP/USD outlook, recent drivers behind the pound’s appreciation, short and long-term forecasts, key technical levels, and the broader economic context influencing both currencies.
## Recent GBP/USD Performance
The GBP/USD currency pair has demonstrated resilience through the mid-year period, with the pound sterling strengthening against the dollar. The pair’s recent move to 1.351 marks a notable change from earlier lows, driven by a mixture of economic data releases, central bank policy expectations, and shifting risk sentiment across global markets.
### Factors Behind the Pound’s Rally
– **Improving UK Economic Data**: The UK economy has displayed better than expected growth figures, with GDP growth surprising to the upside in recent quarters.
– **Easing Brexit Concerns**: With the majority of Brexit-related trade frictions now ironed out, UK businesses have adjusted to the new landscape, reducing downside risks associated with earlier trade disputes.
– **Hawkish Bank of England (BoE) Stance**: Market participants have taken note of the BoE’s commitment to taming inflation through potential further interest rate hikes, providing support to the pound.
### Pressures on the Dollar
Conversely, the US dollar has come under pressure due to various internal and external factors.
– **Shift in Federal Reserve Policy**: After aggressively raising interest rates to combat inflation, recent US economic data has led to speculation that the Federal Reserve may pause or end its tightening cycle soon, denting dollar demand.
– **Lower US Inflation**: Declining CPI readings and moderating inflationary pressures have limited the dollar’s upside, particularly against higher-yielding currencies.
– **Soft US Data**: Slower job growth, weaker consumer sentiment, and subdued retail sales figures have contributed to increasing skepticism about the US economy’s resilience.
## Fundamental Analysis and Macro Drivers
A closer examination of both UK and US macroeconomic fundamentals offers deeper insight into the current GBP/USD dynamics.
### UK Economic Outlook
The UK has weathered several challenges in the aftermath of Brexit and the COVID-19 pandemic. However, recent trends suggest a more robust economic recovery than previously anticipated.
– **Growth Prospects**: UK GDP has expanded at a moderate pace, supported by services sector resilience and increased consumer spending.
– **Labour Market Health**: Unemployment remains low, with wage growth exceeding inflation and bolstering household confidence.
– **Inflation and BoE Action**: Despite signs of softening, UK inflation remains above the central bank’s target, implying the potential need for further rate hikes.
### US Economic Backdrop
The US economy, while still growing, is showing signs of cooling momentum in some areas.
– **Decelerating Growth**: After a strong post-pandemic rebound, GDP growth has slowed amid tighter financial conditions.
– **Mixed Labour Data**: Although unemployment is low by historical standards, job creation has moderated, and wage pressures have softened.
– **Fed’s Balancing Act**: Policymakers at the Federal Reserve face the challenge of cooling inflation without pushing the economy into recession.
## Technical Analysis: Key Levels to Watch
Technical indicators provide additional context for GBP/USD navigation in the short to medium term. The pair’s recent ascent to 1.351 signals a potential breakout, but resistance and support levels will be closely monitored by traders.
### Current Levels
– **Immediate Resistance**: 1.3550 is the next major upside target, with a move above this
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