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GBP/USD Price Prediction: Dollar Rises as GBP Is Affected by Inflation and BoE Rate Reduction Pressure

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  • April 17, 2025
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The GBP/USD currency pair has experienced a breather from its recent rally, pulling back to approximately 1.3230 from a high of 1.3300 in six months. Favorable news regarding US-Japan trade negotiations has boosted the US Dollar, while disappointing inflation readings in the UK have fueled expectations for possible interest rate reductions by the Bank of England. In spite of the pullback, the short-term GBP/USD outlook is bullish, with all short-to-long Exponential Moving Averages (EMAs) moving upwards and robust bullish momentum signaled by the 14-day Relative Strength Index (RSI). A breakout above 1.3292 may propel the pair to higher levels, but a fall below 1.3164 may initiate further drops. KEY LOOKOUTS •  The positive development in US-Japan trade negotiations has brought relief to the US Dollar, which has recovered and witnessed bids. The US Dollar Index (DXY) moving up towards 99.50 may add further pressure on GBP/USD in the short run. •  UK’s soft inflation figures, especially in services, and a bleak jobs market outlook are raising hopes that the Bank of England will choose to cut interest rates, which could press down on the Pound. • The GBP/USD currency pair is in a general uptrend with the support of rising Exponential Moving Averages (EMAs) and a robust V-shape recovery in the 14-day RSI, indicating that the pair may continue to rise if it surmounts recent highs. • Look for possible price reaction at 1.3292 (April 16 high) for a potential shift to 1.3430 and 1.3500. Alternatively, a fall below 1.3164 (April 15 low) may extend the decline, with 1.3063 and the psychological 1.3000 mark serving as major support. GBP/USD pair is facing a brief slowdown in its rally, retreating to near 1.3230 after hitting a six-month peak of 1.3300. This pullback is against the backdrop of firming US Dollar demand, fueled by upbeat news in US-Japan trade negotiations, which has assisted the US Dollar in its recovery. In contrast, weak UK inflation data and a less rosy labor market forecast have fueled hopes of possible interest rate reductions by the Bank of England, which may put further pressure on the Pound. This notwithstanding, the short-term GBP/USD outlook is bullish, with the rising Exponential Moving Averages (EMAs) and a robust bounce in the 14-day RSI pointing to the possibility of the pair reversing its downward bias and returning to upward traction should it reclaim above the 1.3292 level. But a fall below 1.3164 will stimulate further downside action, with 1.3063 and 1.3000 being crucial supports. GBP/USD has pulled back to 1.3230 from a high of 1.3300, as the US Dollar gains strength due to favorable US-Japan trade talks. Soft UK inflation figures and hopes of Bank of England rate cuts weigh on the Pound, although the short-term outlook remains bullish if the pair is able to break above 1.3292. • The GBP/USD pair pulled back to 1.3230 from a six-month high of 1.3300, indicating a halt in the recent rally. •  The US Dollar has benefited as US-Japan trade negotiations improved, sending the US Dollar Index (DXY) to close to 99.50. •  UK inflation data, particularly in the services sector, has raised hopes for possible interest rate reductions by the Bank of England. •  The dismal UK labor market forecast, coupled with tepid inflation, increases the chances of the Bank of England relaxing its monetary policy to spur the economy. •  In spite of the retreat, the overall GBP/USD outlook is bullish, with the Exponential Moving Averages (EMAs) rising and hinting at further bullish momentum. •  The 14-day Relative Strength Index (RSI) has made a V-shaped recovery, which indicates that bullish momentum may continue. •  A move above 1.3292 may take GBP/USD to higher levels such as 1.3430 and 1.3500, and a fall below 1.3164 may take it lower with 1.3063 and 1.3000 being support levels. The GBP/USD currency pair has seen a pullback from its recent six-month high of 1.3300, falling back to 1.3230 as the US Dollar strengthens. This Greenback strength is largely due to favorable news in US-Japan trade talks, which have eased fears over global economic uncertainty. The US Dollar Index (DXY) has also recovered to the vicinity of 99.50, which represents the increasing confidence that the US is moving away from intensifying trade tensions. Investors are more confident now that the US will concentrate on bilateral deals instead of pursuing additional trade wars, thereby providing the US Dollar with a strong support. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView While that, the Pound Sterling continues under pressure as gentle inflation numbers in the UK have teased hopes of interest rate reductions by the Bank of England. The UK services sector inflation eased to 4.7% in March from 5% in February, which may encourage the Bank of England to unwind its monetary policy to fuel growth in the economy. Additionally, a challenging labor market outlook suggests that UK employers may reduce hiring, further impacting the strength of the Pound. Despite these challenges, the overall sentiment for GBP/USD remains cautiously positive, as the pair has shown resilience, supported by market expectations of future upside potential. TECHNICAL ANALYSIS GBP/USD remains in an overall bullish trend, supported by rising Exponential Moving Averages (EMAs) across various timeframes, indicating upward momentum. The 14-day Relative Strength Index (RSI) has exhibited a V-shaped bounce, going from 40.00 up to almost 70.00, indicating strong buying pressure and sustained bullish momentum. The critical technical levels to monitor are 1.3292, the April 16 high, which would trigger further appreciation towards 1.3430 and 1.3500 if broken. On the negative side, a drop below 1.3164 (the April 15 low) might initiate a retracement to 1.3063 and the psychological barrier of 1.3000, where support is likely to be found. In general, the technical indicators suggest a cautiously positive near-term scenario for the pair. FORECAST GBP/USD pair might renew its bullish trajectory if it can break over the recent high of 1.3292 on April 16. Breaking above that mark would set the pair up to move higher, potentially toward the

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Currencies GBP/USD

GBP/USD Approaches 1.3050 as US Dollar Weakens Ahead of Key PPI Data Amid Easing Inflation and Trade Shifts

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  • April 11, 2025
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The GBP/USD is gaining strength, nearing the 1.3050 level, as the US Dollar continues to lose strength in light of easing inflation and changing trade patterns. A lower-than-anticipated US Consumer Price Index (CPI) for March, with headline inflation falling to 2.4% year-over-year, has tempered the greenback’s attractiveness, leading investors to wait for forthcoming Producer Price Index (PPI) releases and consumer sentiment surveys. The US Dollar Index (DXY) has fallen to approximately 100.20, indicating broader market unease regarding the domestic economic outlook. Also, the recent relaxation of global trade tensions—despite a sharp rise in tariffs on Chinese imports—has bolstered risk sentiment in favor of the British Pound. Market expectations are now pointing toward a cautious rate-cut trajectory by the Bank of England, with an update in May looking increasingly probable. KEY LOOKOUTS • Traders are keeping a close eye on March’s Producer Price Index and initial Michigan Consumer Sentiment readings for additional insight into inflation patterns and consumer sentiment. • The US Dollar Index (DXY) has fallen close to 100.20 after softer-than-expected CPI numbers, maintaining pressure on the greenback against major currencies. • Bank of England rate cut expectations in the markets continue to support a phase of gradual relaxation, with possible quarter-point reductions expected in May, August, and November. • The 90-day US tariff pause for most partners, contrasted with higher tariffs on Chinese imports, continues to shape global risk sentiment and currency flows. Markets are looking for a few key drivers of the GBP/USD pair’s recent strength. Focus now shifts to the coming release of the US Producer Price Index (PPI) and initial Michigan Consumer Sentiment numbers, both seen to offer new information on inflationary pressures and consumer sentiment. The US Dollar continues to suffer, with the Dollar Index staying close to 100.20 after a below-forecast CPI reading for March. In contrast, Bank of England rate-cut expectations are still in place, with markets anticipating a probable move in May, followed by possible cuts in August and November. Also, changing global trade flows—dramatized by the US relaxing tariffs on most partners while steeply increasing them on Chinese imports—are influencing investor sentiment and buoying risk-sensitive currencies such as the British Pound. GBP/USD pair is still going higher as the US Dollar declines on the back of weaker inflation reports and risk-off market sentiment. Investors now await major US PPI and consumer sentiment releases to guide them. Hopes for gradual BoE rate reductions are also in support of the Pound. • The pair is trending higher, securing its fourth successive daily gain. • The DXY drops to about 100.20 in the wake of fears over weak inflation and uncertainty in the economy. • March CPI increased 2.4% YoY, less than the 2.6% expectation and down from February’s 2.8%, indicating easing inflation. • Core inflation fell to 2.8% YoY from 3.1%, missing the 3.0% expectation. • Investors look to March PPI and initial Michigan Consumer Sentiment for additional economic indicators. • The US imposed higher tariffs on Chinese imports but suspended increases for most partners, reducing overall trade tensions. • Markets expect three quarter-point reductions by the end of the year, the first in May, then in August and November. The British Pound is strengthening against the US Dollar as market sentiment changes due to recent economic and policy news. One of the main drivers underpinning the Pound is the slowdown in inflation in the United States, with the Consumer Price Index for March revealing a significant slowdown from recent months. This has created increasing expectation that the Federal Reserve will delay further aggressive moves in monetary policy, which in turn has had an impact on confidence in the US Dollar. Concurrently, an overall pick-up in risk sentiment across the world has become more acceptable for investors to hold currencies such as the Pound. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView To the upbeat mood is added a new direction in US trade policy. Although tariffs on Chinese imports were raised sharply, the US implemented a temporary moratorium on new tariffs for all other trading partners. This action has served to allay concerns of an escalating trade war, paving the way for more settled global economic prospects. Back in the UK, the Bank of England is likely to take a gradual path to monetary accommodation, with any rate cuts dovetailed across the course of the year. Such a measured approach has contributed to the Pound’s relative attractiveness, particularly as markets anticipate crucial near-term data releases. TECHNICAL ANALYSIS GBP/USD is displaying robust bullish momentum as it trades around the 1.3050 resistance level, constituting a potential breakout zone. The pair has sustained an uptrend for four straight sessions, backed by a series of higher lows and higher highs on the daily chart. The 50-day moving average is in an upward trend, supporting bullishness, and the Relative Strength Index (RSI) is still below the overbought level, indicating scope for further appreciation. A continued break above 1.3050 may pave the way towards the next resistance at 1.3100, while short-term support is around 1.2970, followed by the psychological 1.2900 level. FORECAST GBP/USD may keep its momentum going in the short term, particularly if future US economic indicators, including the Producer Price Index (PPI) and consumer sentiment, further indicate a decline in inflation. A weaker prognosis for the US economy would likely make the Dollar even weaker, which could give GBP/USD enough strength to breach the 1.3050 resistance level and head for the next level at 1.3100 or even 1.3150. Enhanced global risk appetite, underpinned by reduced trade tensions and stable UK economic indicators, may also keep demand for the Pound firm. Should the Bank of England continue with a measured and consistent policy of rate cuts, it could give further support to the currency. Conversely, GBP/USD will potentially come under selling pressure should US data surprise to the upside, resuscitating hopes of tighter Federal Reserve policy. A rebound in the US Dollar, particularly if it is fueled by more robust inflation or growth data, might drive the

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