FX.co ★ GBP/USD

The GBP/USD currency pair embarked on a tumultuous journey throughout the week, characterized by fluctuations driven by a combination of economic indicators, central bank policies, and technical factors.At the outset of the week, the pair encountered a dip to a five-month low spurred by disappointing US GDP figures, which revealed a slowdown in economic growth to 1.6% in Q1 2024. Despite this setback, the US dollar exhibited resilience, experiencing a modest rebound that exerted pressure on the pound. The dollar's strength persisted despite anticipations of a potential interest rate cut by the US Federal Reserve in June.However, amidst the shadows cast by the GDP report, a glimmer of hope emerged from the personal consumption expenditures (PCE) index. This crucial inflation gauge for the Fed surged by 3.4% in Q1, surpassing the central bank's 2% target. This unexpected surge provided some support for the US dollar, mitigating the negative sentiment triggered by the GDP report.The financial markets eagerly awaited Friday's release of the US PCE Price Index data for further insights into inflation and potential Fed actions. Expectations centered around a 0.3% increase in the monthly rate, with annual growth projected at 2.6% and 2.7% for headline and core PCE figures, respectively.

On the flip side, the pound faced its own set of challenges, with comments from Bank of England Governor Andrew Bailey suggesting that inflation was aligning with expectations, thus diminishing the risk of higher inflation. Speculation mounted regarding a potential rate cut by the BoE, possibly occurring sooner than the Fed's anticipated move. Such speculations acted as a limiting factor for further gains for the pound against the dollar.Technically, the GBP/USD pair exhibited signs of attempting to recover from recent lows, with its sights set on a resistance zone between 1.2495 and 1.2520, coinciding with the 20-day simple moving average (SMA). However, further upside potential faced constraints from the 200-day SMA at 1.2555 and the downtrend line around 1.2585. Technical indicators such as the MACD and Stochastic oscillator hinted at a potential short-term bounce, adding to the complexity of the pair's trajectory.In conclusion, the GBP/USD pair found itself ensnared in a tug-of-war between mixed US economic data, expectations of rate cuts from both the Fed and BoE, and technical considerations. The forthcoming release of US PCE data and the BoE's monetary policy stance are poised to be pivotal determinants shaping the pair's direction in the ensuing weeks.