**GBP/USD Price Forecast: Pound Breaks Higher to 1.3450 as UK Data Drive GBP/USD Rally**
*By TradingNews Staff (Original Author)*
The British Pound (GBP) has surged to notable highs against the US Dollar (USD), climbing past the 1.3450 mark in June 2024. Strong UK economic data and a weaker US Dollar have propelled GBP/USD to levels not seen for several months. This GBP/USD price forecast examines the drivers behind the latest rally, recent economic data, technical analysis, and the outlook for the Pound Sterling in the weeks ahead.
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## UK Economic Data Fuels Pound Rally
The primary driver behind the latest GBP/USD surge has been a succession of robust UK economic releases. The uptick in the Pair aligns with investor optimism regarding the resilience of the British economy post-pandemic and into the current year. Key statistics shaping the market’s view include:
– **GDP Growth**: UK Gross Domestic Product outperformed expectations, registering quarterly growth above estimates. The Office for National Statistics reported a 0.4% increase in Q1 2024 GDP, compared to the 0.2% expected.
– **Labor Market Strength**: Unemployment remains historically low, hovering at 3.8%. Job creation outpaced forecasts, with wage growth maintaining upward pressure.
– **Inflation Figures**: Core inflation remains elevated, last reported at 3.5%. While above the Bank of England’s (BoE) 2% target, it is showing some signs of deceleration compared to the previous month’s reading.
– **Retail Sales**: March and April 2024 retail sales rose 1.5% year-on-year, offering evidence of sustained consumer demand.
– **Services Sector Resilience**: The UK Services PMI, a critical indicator for the largely services-led UK economy, climbed to 54.7 in May, showing robust expansion.
These readings have collectively enhanced sentiment towards the UK economic outlook, prompting traders to bid up the Pound against the Dollar.
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## Bank of England Policy Outlook and Its Influence
Another key factor in the GBP/USD rally has been market pricing of Bank of England rate decisions compared to the US Federal Reserve.
### BoE’s Shift on Rate Cuts
– Market participants were previously pricing in up to two interest rate cuts in 2024.
– Following the recent unusually strong economic data, expectations have shifted. The central bank is now seen as likely to delay the start of its easing cycle.
– The current BoE Bank Rate remains at 5.25%, and policymakers have highlighted the persistence of domestic inflationary pressures as a reason to hold off on cuts.
– Traders now expect the first BoE rate cut no earlier than September 2024, with only one cut priced in for the remainder of the year.
### Comparisons to Fed Policy
– The US Federal Reserve, by contrast, has signaled caution about the pace of US disinflation and appears in no rush to cut rates.
– However, US economic data has been mixed, and political factors—such as the ongoing US presidential election—have injected volatility into the Dollar.
– As a result, the rate differential between the UK and US may remain stable, but the recent momentum has been with the Pound.
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## Technical Analysis: GBP/USD at 1.3450 and Key Levels Ahead
As GBP/USD soared past the 1.3450 level, technical indicators have shown increasingly bullish signals. The following technical analysis provides an assessment of the pair’s current trend and likely price action based on chart patterns and historical resistance/support.
### Daily Price Chart Observations
– **Breakout Confirmation**: GBP/USD cleared the 1.3400 area, long regarded as a significant resistance level. Price action above this threshold confirms a bullish breakout.
– **Moving Averages**: The 50-day and 200-day simple moving averages (SMA) are both sloping upwards, with
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