February 24, 2024
London, UK

GBPUSD Pushes Higher on Economic Data

GBPUSD

GBPUSD trades higher on better-than-expected economic data released earlier today. The UK economy expanded by 0.1% in November 2022 well above the forecasts for a 0.2% contraction. The UK economy reported 0.5% growth in October 2022. In other economic data:

The UK Manufacturing Production dropped 0.5% in November below the expectations of -0.2%.

The United Kingdom Industrial Production came in at -0.2%, topping the forecasts of -0.3% in November.

The UK Manufacturing Production in November came in at -5.9% worse than the expectations of -4.8%.

Economists expect the Bank of England to hike interest rates to 4% in February after nine 9 rate hikes the previous year, and now estimate a terminal rate of around 4.5%.

On the other side of the equation, the US dollar is under pressure after yesterday’s data which showed that inflation is easing pushing the Fed to also slow down its rate hikes in the upcoming FOMC meetings. The annual Consumer Price Index (CPI) dropped to 6.5% in December from 7.1% the previous month. The US Core CPI, which cut out volatile food and energy prices, also dropped to 5.7% from 6% in November.

Forex markets now estimate that the probability of a 25 basis points rate hike in February is around 95% from 75%. FOMC members on the other hand continue to point for more rate hikes and no interest rates cut during 2023.

GBPUSD Technical Analysis

GBPUSD is trading 0.03% higher at 1.2218, as yesterday’s rally after the US CPI figures cools off. The pair is trading at one-month highs keeping the bullish momentum intact.

On the upside, initial resistance for GBPUSD stands at 1.2248 the daily and yesterday’s session top. A break above might challenge 1.2431 the high from December 15, 2022.

On the flip side, the first support for GBPUSD stands at 1.2088 the low from yesterday’s trading session. If the pressure persists, the next critical level to watch is around 1.2020 where the 50-day moving average crosses. The bears attempted two days to break that support in early January without success. If this time GBPUSD breaks that level next support stands at 1.2000 the 200-day moving average. A break below would neutralize the bullish momentum and a move down to 1.1685 can’t be ruled out.

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