• The GBP/USD price analysis shows market focus returning to the looming Fed rate cut.
• Data on Thursday revealed that US consumer inflation increased by 0.4%.
• US unemployment claims jumped to 263,000, well above estimates of 235,000.

The GBP/USD price analysis shows the pound recovering as focus returns to the looming Fed rate cut. The sterling had dropped in the previous session as the US dollar rose after upbeat inflation figures. However, unemployment claims data raised more alarm about the labor market, solidifying bets for a rate cut.

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The dollar rose after data on Thursday revealed that US consumer inflation increased by 0.4%, compared to the forecast of 0.3%. Meanwhile, on an annual basis, inflation increased by 2.9% as expected. Though the numbers pointed to accelerating price pressures, it was not enough to dampen Fed rate cuts.

Meanwhile, unemployment claims jumped to 263,000, well above estimates of 235,000. The number highlighted the rising unemployment, putting pressure on the Fed to lower rates.

Elsewhere, traders are still focused on the UK’s fiscal health, with the next budget coming at the end of November. Another bond market turmoil could weaken sterling.

“Rising government borrowing costs, in the form of higher yields on its bonds, or gilts, mean Rachel Reeves will want to put together a tax-and-spending plan that appeases bond vigilantes,” Russ Mould, AJ Bell investment director, said in a note.

GBP/USD key events today

• Preliminary University of Michigan Consumer Sentiment
• Preliminary University of Michigan Inflation Expectations

GBP/USD technical price analysis: Bulls struggle to confirm channel breakout

On the technical side, the GBP/USD price has pulled back to retest he recently broken channel resistance. Moreover, bulls are struggling to make a new high that would confirm the breakout. The price has pulled back to retest the 30-SMA, and the RSI trades above 50, supporting bullish momentum. However, bulls are facing solid resistance at the 1.3575 level.

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Previously, GBP/USD was trading in a bearish channel, making lower highs and lows. However, this changed when there was a surge in bullish momentum that allowed the price to break above the channel resistance. As a result, it made a higher high, breaking the previous pattern.

However, bulls must now break above the 1.3575 resistance to confirm the channel breakout and start a bullish trend. On the other hand, if the resistance holds firm, bears might regain enough momentum to push the price below the 30-SMA and back into the channel.

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