28 May 2024, GBP/USD
An event to look out for today:
17:00 GMT+3. USD - Consumer confidence indicator
GBPUSD:
The GBP/USD pair is consolidating around 1.2770 after hitting two-month highs in the early Asian session on Tuesday. The US Dollar Index (DXY) remains under some selling pressure around 104.60, providing some support to the major pair.
The market sees the probability of a Fed rate cut in September at 49%, up from 63% a week ago, according to the CME FedWatch tool. Key US data this week may provide some hints on the economic outlook and inflation trajectory. Thursday will see the release of the first reading of U.S. first-quarter GDP economic growth, as well as the Core Personal Consumption Expenditures price index (Core CPE), which is the Fed's preferred inflation gauge. Better-than-expected US inflation data could boost the USD and put pressure on GBP/USD in the near term.
On the other hand, the Pound Sterling (GBP) is gaining momentum as traders expect the Bank of England (BoE) to keep borrowing costs higher for longer to cool inflation. Citigroup strategist Jamie Searle believes the UK election in July will "further reduce the likelihood of a short-term Bank of England rate cut, adding that this reduces the risk of a later election interfering with the BoE's cycle and focusing only on data dependence."
Trading recommendation: Trade mainly with buy orders at the price level of 1.2795. We consider sell orders at the price level of 1.2730.
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