• The US CPI report showed a decline in inflation.

• Employment data from the UK showed a significant drop in jobless claims.

• Next week, the UK will release its crucial inflation report.

The GBP/USD weekly forecast shows more upside potential as easing US inflation increases Fed rate cut expectations, weighing on the dollar.

Ups and downs of GBP/USD

The GBP/USD pair ended the week very bullish as economic data from the US weakened the dollar. At the same time, data from the UK strengthened the pound. The US Consumer Price Index was the major catalyst during the week, showing a decline in inflation. Consequently, investors gained confidence that the Fed would cut rates in September.

–Are you interested in learning more about forex indicators? Check our detailed guide-

Meanwhile, employment data from the UK showed a significant drop in jobless claims, indicating a tight labor market that could keep the BoE from cutting rates too soon.

Next week’s key events for GBP/USD

Next week, the UK will release its crucial inflation report. At the same time, investors will focus on retail sales and the manufacturing PMI. Meanwhile, the US will release the FOMC meeting minutes and data on durable goods orders. 

The UK inflation report will significantly shape the outlook for Bank of England rate cuts. Currently, markets are pricing in a 55% chance that the BoE will cut rates in June. On Tuesday, BoE chief economist Huw Pill said that the central bank might be ready to cut rates in the summer. However, the labor market remains tight. If inflation remains high, this outlook might change significantly.

Meanwhile, the FOMC minutes will reveal what led policymakers to the last decision to hold rates. It might also give clues on what the Fed will do next.

GBP/USD weekly technical forecast: Bulls aiming for 1.2802 resistance.

On the technical side, the bias for GBP/USD has gone from bearish to bullish. At the same time, the price is back within the 1.2551–1.2802 range area. The previous bearish trend paused and was reversed at the 1.2300 level. Here, the price made a morning star candlestick pattern, leading to a break above the 22-SMA and the 1.2551 key level.

–Are you interested in learning more about next cryptocurrency to explode? Check our detailed guide- 

Furthermore, when the price broke above the SMA, it pulled back to retest it as support before making a new high. This confirmed that bulls were ready to take charge. Currently, the path is clear for the pound to retest the 1.2802 resistance level. A break above this level would further strengthen the bullish bias.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

• The Pound Sterling advanced to five-week highs against the Dollar this week.
• GBP/USD has so far met decent resistance around 1.2700.
• Next on tap for Cable will be the release of UK inflation figures.

The British Pound (GBP) exhibited a bullish trend throughout the week and managed to advance to fresh five-week peaks around 1.2700 against the US Dollar (USD). This encouraged GBP/USD to close its third week of gains out of the last four ones, leaving behind at the same the key 200-day SMA at 1.2539.

Simultaneously, Cable’s price action followed the resurgence of a marked selling pressure in the Greenback, as investors continued to reprice the likelihood of the start of the Fed’s easing programme in September.

UK inflation comes to the fore

Contributing to the optimism around the British pound, the UK labour market delivered mixed results, while the focus of attention is now expected to gradually shift to the publication of UK inflation figures tracked by the Consumer Price Index (CPI) due on Wednesday.

The continuation of the downtrend in UK consumer prices should put the Bank of England (BoE) under extra pressure to start considering reducing its policy rate at some point over the summer, as hinted by some BoE-speak this week.

BoE: To cut now or later?

Still around the BoE, and despite the fact that the UK’s job market remains tight by historical standards, Chief Economist Huw Pill indicated earlier in the week that it may be able to contemplate decreasing interest rates during the summer. In addition, his colleague Megan Greene argued that the central bank should wait for more clear evidence that high inflation pressures in the country are becoming less stubborn before moving to decrease interest rates.

On this, money markets are putting in a 55% possibility of a rate drop in June.

The above came to reinforce comments from Governor Andrew Bailey, who indicated a preference for lowering rates in the coming quarters and highlighted recent inflation improvements.

On another front, data from the advanced PMIs, both in the Manufacturing and Services sectors, as well as UK Retail Sales, should also collaborate with the very near-term price action around the pair.

GBP/USD: Technical Outlook

By surpassing the key 200-day SMA at 1.2539, GBP/USD has now opened the door to potential extra gains in the short-term horizon, along with the change to a more constructive outlook.

That said, the so-far May top at 1.2700 (May 16) is being identified as the upcoming resistance level. Closely following this level emerges the April peak of 1.2709 (April 9), prior to the weekly high of 1.2803 (March 21), and the 2024 top of 1.2893 (March 8). Further up comes the weekly peak of 1.2995 (July 27, 2023), just below the psychological 1.3000 yardstick.

On the flip side, there is a key contention zone at the 200-day SMA of 1.2539. Once Cable clears this region, it could embark on a potential test of the 2024 bottom of 1.2299 (April 22), seconded by the weekly low of 1.2187 (November 10, 2023), and the October 2023 low of 1.2037, all ahead of the relevant support of 1.2000.

On the daily chart, the Relative Strength Index (RSI) improved to around 63.

 

• The Pound Sterling advanced to five-week highs against the Dollar this week.
• GBP/USD has so far met decent resistance around 1.2700.
• Next on tap for Cable will be the release of UK inflation figures.

The British Pound (GBP) exhibited a bullish trend throughout the week and managed to advance to fresh five-week peaks around 1.2700 against the US Dollar (USD). This encouraged GBP/USD to close its third week of gains out of the last four ones, leaving behind at the same the key 200-day SMA at 1.2539.

Simultaneously, Cable’s price action followed the resurgence of a marked selling pressure in the Greenback, as investors continued to reprice the likelihood of the start of the Fed’s easing programme in September.

UK inflation comes to the fore

Contributing to the optimism around the British pound, the UK labour market delivered mixed results, while the focus of attention is now expected to gradually shift to the publication of UK inflation figures tracked by the Consumer Price Index (CPI) due on Wednesday.

The continuation of the downtrend in UK consumer prices should put the Bank of England (BoE) under extra pressure to start considering reducing its policy rate at some point over the summer, as hinted by some BoE-speak this week.

BoE: To cut now or later?

Still around the BoE, and despite the fact that the UK’s job market remains tight by historical standards, Chief Economist Huw Pill indicated earlier in the week that it may be able to contemplate decreasing interest rates during the summer. In addition, his colleague Megan Greene argued that the central bank should wait for more clear evidence that high inflation pressures in the country are becoming less stubborn before moving to decrease interest rates.

On this, money markets are putting in a 55% possibility of a rate drop in June.

The above came to reinforce comments from Governor Andrew Bailey, who indicated a preference for lowering rates in the coming quarters and highlighted recent inflation improvements.

On another front, data from the advanced PMIs, both in the Manufacturing and Services sectors, as well as UK Retail Sales, should also collaborate with the very near-term price action around the pair.

GBP/USD: Technical Outlook

By surpassing the key 200-day SMA at 1.2539, GBP/USD has now opened the door to potential extra gains in the short-term horizon, along with the change to a more constructive outlook.

That said, the so-far May top at 1.2700 (May 16) is being identified as the upcoming resistance level. Closely following this level emerges the April peak of 1.2709 (April 9), prior to the weekly high of 1.2803 (March 21), and the 2024 top of 1.2893 (March 8). Further up comes the weekly peak of 1.2995 (July 27, 2023), just below the psychological 1.3000 yardstick.

On the flip side, there is a key contention zone at the 200-day SMA of 1.2539. Once Cable clears this region, it could embark on a potential test of the 2024 bottom of 1.2299 (April 22), seconded by the weekly low of 1.2187 (November 10, 2023), and the October 2023 low of 1.2037, all ahead of the relevant support of 1.2000.

On the daily chart, the Relative Strength Index (RSI) improved to around 63.

 

Most Read: Gold, Dow Jones 30, USD/JPY – Bears or Bulls in Control?

USD/JPY has rallied sharply this year, boosted by persistent and, sometimes widening interest rate differential between the United States and Japan. Last month, the pair briefly hit a multi-decade high around 160.00, but couldn’t maintain those levels after Japanese authorities stepped in to prop up the domestic currency.

In recent weeks, the pair has seen increased volatility, oscillating up and down but going nowhere, dancing to the tune of endless market news, with the exchange rate currently sitting just below the 155.50 mark. In any case, with the Fed intent on cutting borrowing costs later this year and the apparent resumption of the disinflationary trend, USD/JPY could start moving lower in the medium term.

For a clearer signal that a sustained bearish phase has begun, traders should watch the ascending trendline that has supported the pair’s rise since December 2023. This trendline, which currently aligns with the 50-day simple moving average at 153.25, is a major technical floor. A decisive breakdown of this area could trigger a sharp selloff, with potential downside targets to consider at 152.00, 150.90, and 148.85.

Conversely, if buyers regain the upper hand and initiate a bullish turnaround, resistance looms at 156.80, this week’s peak. While it will be challenging for bulls to overcome this barrier, a successful breakout could see prices head back towards 158.00 and potentially 160.00. However, these rallies might be short-lived due to the possibility of FX intervention by the Japanese government to stem the yen’s bleeding.

For a complete overview of the USD/JPY’s technical and fundamental outlook, make sure to download our complimentary quarterly forecast!

Recommended by Diego Colman

Get Your Free JPY Forecast

USD/JPY TECHNICAL CHART

USD/JPY Chart Created Using TradingView

• Data showed that US import prices jumped 0.9% last month.

• Fed policymakers have maintained a cautious stance since the inflation report.

• Data revealed a smaller-than-expected drop in unemployment claims.

The GBP/USD price analysis on Friday is slightly bullish as the dollar recovers after signs that inflation remains a concern. However, the general market sentiment showed higher expectations for Fed rate cuts, which weighed on the dollar in the last few sessions.

–Are you interested in learning more about crypto robots? Check our detailed guide-

The dollar rose from Thursday after data showed that US import prices jumped 0.9% last month, raising inflation concerns. Imported inflation could make the Fed hesitate to cut interest rates too early. However, this report followed the US CPI report, which showed that economic inflation was easing. Consequently, Fed rate cut bets are still up. Moreover, investors expect at least two rate cuts this year, one in September and another in December.

Meanwhile, although investors are more convinced of a cut in September, Fed policymakers have maintained a cautious stance since the inflation report. Despite the decline, Thomas Barkin said that inflation was still not where it should be. Meanwhile, Loretta Mester noted that the Fed’s current restrictive policy will help lower inflation to the central bank’s target.

Further support for the dollar came after the US Labor Department revealed a smaller-than-expected drop in unemployment claims. Notably, jobless claims fell to 222,000, coming above forecasts for a decline to 220,000. This indicated strength in the labor market. Despite the recent cooling in US jobs figures, there has been no confirmation that the downtrend will continue. Therefore, there is still a risk that the resilience will continue, keeping the Fed cautious.

GBP/USD key events today

Investors don’t expect any high-impact releases from the US or the UK as the week ends. Therefore, the pair might make small moves.

GBP/USD technical price analysis: Bullish bias holds amid temporary pullback

 

On the technical side, the GBP/USD price retreats after retesting the 1.2700 psychological level. However, since the retreat comes amid a bullish trend, it might only be temporary. The bullish bias remains strong because the price sits well above the 30-SMA, and the RSI is in bullish territory. 

–Are you interested in learning more about buying Dogecoin? Check our detailed guide- 

Therefore, bears might find it difficult to continue beyond the 30-SMA support. Furthermore, solid support is at the 1.2600 key level, where bulls might resume the uptrend. In such a case, the price would return to retest the 1.2700 resistance level.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

• The euro has bounced a bit after initially selling off on Thursday as the 50-day EMA continues to attract a certain amount of attention.
• That being said, the 200-day EMA above offers significant resistance, especially as it is sitting right at the 0.86 level.
• In general, this is a market that continues to squeeze, but I do think that we have built a fairly solid basing pattern.
• This is a pattern that has been playing out over the last several months, so I do think that it has a lot of validity due to the fact that we have simply shown it to be stable.

The upside

If we can break above the 0.86 level, then it opens up the possibility of moving to the 0.8650 level, and then possibly another 100 points to the 0.8750 level. Historically speaking, the 0.85 level underneath, which is where we bounced from, is a massive support level going back several years on the monthly chart. So, it does make a certain amount of sense that we would see a buy on the dips attitude every time we get close to that area. If we were to break down below the 0.85 level, it would be disastrous for the euro against the pound.

• 

In general, I think both of these currencies are bouncing around against each other, and that is typical. It does tend to be a choppy market, but it looks like we are gradually grinding to the upside, and that’s how you have to approach this market, but keep in mind that the PIP value in this pair tends to be much higher than what you’re used to trading, so therefore, it doesn’t need to move as far to bring in decent profits. Make sure to adjust your position size accordingly for this EUR/GBP currency pair, due to the fact that the value of each point is so much bigger.

In general, I am bullish, but I also recognize that you’re going to have to be somewhat patient with this move, as it could take a certain amount of time to truly bring in profit, but that’s the nature of this pair during most market conditions anyway.

Ready to trade our daily Forex forecast? Here’s a list of some of the best regulated forex brokers to check out. 

• GBP/USD fluctuates near 1.2650 after closing in the red on Thursday.
• Technical buyers could look to retain control while 1.2630 holds as support.
• Investors await comments from Federal Reserve officials ahead of the weekend.

GBP/USD staged a technical correction and closed in negative territory on Thursday after rising 0.75 on Wednesday. The pair continues to edge lower early Friday and was last seen trading near 1.2650.

Comments from Federal Reserve (Fed) officials helped the US Treasury bond yields rebound and supported the US Dollar (USD) on Thursday.

Atlanta Fed President Raphael Bostic acknowledged the inflation progress in April but noted that the Fed was not yet there to start easing the policy. On a similar tone, Cleveland Fed President Loretta Mester noted that the monetary policy was well-positioned while they look to review more data and Richmond Fed President Thomas Barking Told CNBC that the latest Consumer Price Index (CPI) data showed that inflation was not where the Fed was trying to get.

In the meantime, the US Department of Labor reported that there were 222,000 weekly Initial Jobless Claims in the week ending May 11, down from 232,000 in the previous week.

Ahead of the weekend, Minneapolis Fed President Neel Kashkari, Fed Governor Christopher Waller and San Francisco Fed President Mary Daly are expected to deliver speeches. In case Fed officials refrain from hinting at a policy pivot in September, the USD could stay resilient in the American session and limit GBP/USD’s upside.

GBP/USD Technical Analysis

The 100-day Simple Moving Average (SMA) aligns as key support for GBP/USD at 1.2630. If the pair tests this level and confirms it as support, technical buyers could take action. In this scenario, resistances could be seen at 1.2700, 1.2760 (Fibonacci 78.6% retracement of the latest downtrend) and 1.2800 (psychological level, static level).

A daily close below 1.2630 could attract sellers and open the door for an extended correction toward 1.2600 (50-day SMA) and 1.2540 (200-day SMA).

 

• GBP/USD fluctuates near 1.2650 after closing in the red on Thursday.
• Technical buyers could look to retain control while 1.2630 holds as support.
• Investors await comments from Federal Reserve officials ahead of the weekend.

GBP/USD staged a technical correction and closed in negative territory on Thursday after rising 0.75 on Wednesday. The pair continues to edge lower early Friday and was last seen trading near 1.2650.

Comments from Federal Reserve (Fed) officials helped the US Treasury bond yields rebound and supported the US Dollar (USD) on Thursday.

Atlanta Fed President Raphael Bostic acknowledged the inflation progress in April but noted that the Fed was not yet there to start easing the policy. On a similar tone, Cleveland Fed President Loretta Mester noted that the monetary policy was well-positioned while they look to review more data and Richmond Fed President Thomas Barking Told CNBC that the latest Consumer Price Index (CPI) data showed that inflation was not where the Fed was trying to get.

In the meantime, the US Department of Labor reported that there were 222,000 weekly Initial Jobless Claims in the week ending May 11, down from 232,000 in the previous week.

Ahead of the weekend, Minneapolis Fed President Neel Kashkari, Fed Governor Christopher Waller and San Francisco Fed President Mary Daly are expected to deliver speeches. In case Fed officials refrain from hinting at a policy pivot in September, the USD could stay resilient in the American session and limit GBP/USD’s upside.

GBP/USD Technical Analysis

The 100-day Simple Moving Average (SMA) aligns as key support for GBP/USD at 1.2630. If the pair tests this level and confirms it as support, technical buyers could take action. In this scenario, resistances could be seen at 1.2700, 1.2760 (Fibonacci 78.6% retracement of the latest downtrend) and 1.2800 (psychological level, static level).

A daily close below 1.2630 could attract sellers and open the door for an extended correction toward 1.2600 (50-day SMA) and 1.2540 (200-day SMA).

 

GBP/JPY Forecast Video for 04.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit during the trading session on Wednesday, as we have broken below the ¥170 level again. That being said, the market is likely to see a lot of buying pressure underneath, and I think it’s probably only a matter of time before we turn around and go to the upside. With this being the case, the market is likely to continue to see a lot of volatility, but after that massive shot higher, one would have to see a little bit of a pullback in order to offer value.

I think at this point, that’s exactly what’s going on, so I would be very patient and wait to see whether or not we get a supportive looking candlestick. The ¥169 level was an area of importance, and therefore should be again if we turn around and show signs of strength. Alternatively, the 50-Day EMA sits at the ¥165 level, as it is going to be a technical analysis version of a floor, and therefore I think a lot of traders will be paying close attention to it.

On the other hand, if we were to turn around and break above the recent high, then I think the British pound will more likely than not will continue to go toward the ¥175 level. On the other hand, if we do break down below the ¥165 level, then the market would break down rather significantly. Keep in mind that the Bank of Japan continues to see a reason to keep interest rates lower, therefore it will continue to see quite a bit of negativity on the Japanese yen, therefore I think we’ve got a situation where traders will continue to buy other currencies against it. Furthermore, you need to keep in mind that the British pound continues to see a lot of upward pressure due to the fact that inflation has been so strong in the United Kingdom.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE:

Wondering about EUR/USD’s medium-term prospects? Gain clarity with our quarterly forecast. Download it now!

Recommended by Diego Colman

Get Your Free EUR Forecast

EUR/USD FORECAST – TECHNICAL ANALYSIS

EUR/USD was subdued on Thursday, failing to follow through to the upside after the previous session’s bullish breakout, with the exchange rate retreating modestly but holding steady above 1.0865. Bulls must ensure prices stay above this threshold to fend off potential seller resurgence; failure to do so could trigger a pullback toward 1.0810/1.0800.

On the flip side, if buying momentum resumes and the pair pivots upwards, overhead resistance may materialize near 1.0980, an important technical barrier defined by the March swing high. On further strength, buyers could be emboldened and initiate an attack on 1.1020 in short order, a dynamic trend line extended from the 2023 peak.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Using TradingView

For an extensive analysis of the British pound’s medium-term prospects, download our Q2 trading forecast now!

Recommended by Diego Colman

Get Your Free GBP Forecast

GBP/USD FORECAST – TECHNICAL ANALYSIS

GBP/USD ticked lower on Thursday following a robust performance earlier in the week, with buyers pausing for a breather to evaluate the outlook in the wake of the recent rally. If bullish momentum resumes, resistance awaits at 1.2720, marked by the 61.8% Fibonacci retracement of the 2023 sell-off. Beyond this, the 1.2800 handle could come into focus.

Conversely, if upward pressure fizzles out and leads to a meaningful bearish reversal, confluence support stretching from 1.2615 to 1.2590 could provide stability and prevent a deeper retrenchment. In the event of a breakdown, however, attention will shift towards the 200-day simple moving average, positioned around 1.2540. Further losses below this point could usher in a move towards 1.2515.

GBP/USD PRICE ACTION CHART

GBP/USD Chart Created Using TradingView

FOMC member Christopher Waller is on the calendar to speak on Friday (May 17). A similar stance could temper investor expectations of a September Fed rate cut. In a recent speech, Christopher Waller said there was no rush to cut interest rates. Waller spoke before the US Jobs Report and inflation numbers. A change in stance warrants investor attention.

While inflationary pressures eased, the US labor market remains tight. Tight labor market conditions could support wage growth and increase disposable income. Upward trends in disposable income could fuel consumer spending and demand-driven inflation.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on central bank chatter. Calls for a higher-for-longer Fed rate path could tilt monetary policy divergence toward the US dollar. Economic indicators from Japan need to signal a shift in momentum for investors to consider the possibility of a BoJ policy move.

USD/JPY Price Action

Daily Chart

The USD/JPY hovered above the 50-day and 200-day EMAs, affirming the bullish price signals.

A USD/JPY break above the 156 handle may give the bulls a run at the 158 handle. If the USD/JPY returns to 158, the April 29 high of 160.209 could become the next price target.

On Friday, Bank of Japan and FOMC member commentary need consideration.

Alternatively, a USD/JPY break below the 50-day EMA could give the bears a run at the 151.685 support level.

The 14-day RSI at 54.20 indicates a USD/JPY move to the April 29 high of 160.209 before entering overbought territory.