GBP/USD pair rose towards the 1.3200 level in early European trading on Tuesday, buoyed by optimism in recent US-UK trade progress and the cautious policy-easing stance of the Bank of England. Optimism for the Pound was also encouraged by the upgraded UK growth prediction of the BoE and the measured interest rate cut approach by the central bank. Meanwhile, traders remain focused on upcoming high-impact data releases, including the UK employment report and the US Consumer Price Index (CPI) for April, which could influence the next moves of both the Bank of England and the Federal Reserve, potentially reshaping near-term direction for the currency pair.
KEY LOOKOUTS
• Today’s UK jobs report is being followed closely by markets, which has the potential to shape expectations about the Bank of England’s upcoming policy actions and the health of the British economy.
• The US inflation data for April will be one of the prime drivers for the USD, and it has the potential to guide the Federal Reserve’s attitude toward interest rate reductions. A better-than-anticipated CPI might tighten the Greenback.
• The Pound is still underpinned by the Bank of England’s prudent stance on rate cuts and its revised UK growth forecast (1% vs 0.75%), which suggests optimism about economic resilience.
• Encouraging news from last week’s trade developments, including lower tariffs on British car and steel exports, is buoying sentiment towards the GBP and adding further support to GBP/USD.
GBP/USD pair is trading close to 1.3200 as market participants wait for major macroeconomic data releases that could set the direction of the pair. Markets are looking towards the UK employment report, which may provide some guidance on the policy direction of the Bank of England after its cautious rate cut and revised growth forecast to 1%. At the same time, the April US Consumer Price Index (CPI), scheduled later today, may influence hopes regarding the next move by the Federal Reserve—especially if the inflation prints stronger than anticipated. Moreover, positive recent news for US-UK trade relations, such as lowered tariffs on UK car and steel exports, is still supporting the Pound.
GBP/USD is trading around 1.3200 as markets look to pivotal UK jobs and US inflation figures later today. The Pound continues to be supported by the BoE’s conservative policy approach and enhanced UK growth prospects, with positive US-UK trade developments contributing to the upbeat mood.
• GBP/USD is near 1.3200 after early European session gains on Tuesday.
• UK job data later today may affect the direction of policy by the Bank of England.
• US release of April CPI is likely to direct the Federal Reserve’s future monetary policy action.
• BoE’s cautious rate reduction and improved growth estimate (from 0.75% to 1%) provide a boost to the Pound.
• US-UK trade updates, such as lowered tariffs on autos and steel, enhance GBP sentiment.
• Sentiment for GBP is positive as the BoE hints at a gradual policy-easing policy.
• A higher-than-anticipated US CPI may propel the USD and weigh on the GBP/USD pair.
GBP/USD pair is gaining focus as market participants look to crucial economic news releases from both the UK and the US. Encouraging news in the trade relationship between the two countries, specifically the US move to lower tariffs on British steel and cars, has helped the Pound outlook improve. This follows the recent Bank of England policy revision, during which it opted for cautious treatment of rate changes while affirming faith in the UK economy’s strength by lifting its growth projection.
GBP/USD DAILY PRICE CHART
CHART SOURCE: TradingView
Now the spotlight turns to forthcoming economic statistics, including the UK labor data and US Consumer Price Index (CPI) for April. These releases will help clear up further the economic health of both nations and the likely path of future monetary policy. As data remains top of mind for policymakers, the results of these releases are anxiously awaited by investors and pundits alike.
TECHNICAL ANALYSIS
GBP/USD is exhibiting bullish strength as it trades close to the 1.3200 resistance level. A persistent break above this psychological level could pave the way towards the next resistance area around 1.3250–1.3270. The pair is still underpinned by the 50-day moving average, and the RSI is trading close to 60, indicating there is still scope for further upside before it goes into overbought territory. But if it fails to breach 1.3200 convincingly, then a minor pullback might be initiated with initial support around 1.3130, succeeded by more firm demand at 1.3070. Traders will be looking for a clean breakout or rejection here as the upcoming UK and US data announcements may be the drivers for the next move.
FORECAST
If the next UK jobs data surprises to the upside and the Bank of England continues with its wary but accommodative tone, GBP/USD may continue to make waves. A good print from the labor market, in addition to ongoing confidence in UK growth and falling trade tensions with America, might propel the pair above the 1.3200 handle. A firm breach above this resistance would unlock the way to 1.3250 and even 1.3300 in the short term, particularly if US inflation statistics print softer than anticipated, reducing the US Dollar.
On the other hand, a softer-than-anticipated UK jobs report or a hotter-than-anticipated US CPI reading may put significant downward pressure on GBP/USD. Sturdy inflation figures can rekindle hopes of extended higher interest rates by the Federal Reserve, increasing demand for the Greenback and pulling the pair down. A breakdown below 1.3130 would see the correction extending to 1.3070, with additional bearish pressure potentially extending to the 1.3000 psychological level if risk appetite worsens or the macro data severely underwhelms.
