empty
05.06.2024 12:28 AM
The pound has updated a 2-month high and is not going to stop. Overview of GBP/USD

The pound is gaining momentum, and there are at least two reasons for this. The first reason is that after shrinking for two quarters in a row, economic growth has resumed, PMI indices are in expansion territory, and there are good chances that it will continue to rise. This reduces the burden on the Bank of England and could potentially adjust rate cuts plans for in favor of a more gradual trajectory.

This image is no longer relevant

The pace of the UK economic recovery is high, with production levels growing at the fastest rate since early 2022. There is simultaneous growth in production and new orders. Business optimism is rising, but costs are also increasing – inflation in the manufacturing sector has been rising for the fifth consecutive month and has reached its highest level in a year. If costs continue to rise, the BoE will face the threat of another round of inflation growth, making any rate cuts unlikely.

The net volume of consumer lending in April was significantly higher than forecasted, further indicating a shift in consumer sentiment. Consumers are ready to spend more as they feel more confident about their incomes, which is a sign of a pickup in GDP growth in Q2.

The second reason is the accelerated slowdown of the US economy, which might force the Federal Reserve to start lowering rates earlier. The dollar sharply declined across the board on Monday following the release of the ISM manufacturing index. Instead of the expected recovery from 49.2 to 49.6, it fell to 48.7 in May, which the markets interpreted as another sign of an emerging recession. Now, the market is focused on the ISM services index on Wednesday. The forecasts are positive (from 49.4 to 50.5), but if this gauge also falls short of expectations, the dollar could lose even more than it did on Monday, as forecasts for the first Fed rate cut might shift from September to July.

The net long EUR position increased by 1.94 billion, (the second weekly result after the euro) to 2 billion, with growth observed for the fifth consecutive week. Positioning has shifted from neutral to bullish. The price is above the long-term average and is firmly rising.

This image is no longer relevant

The pound reached the target set the previous week. It has not yet managed to consolidate above this level, but everything suggests that the next attempt will be successful. A deep correction is unlikely; we expect growth to resume after a brief consolidation, with the target being the local high of 1.2892, followed by 1.2980/3000. Increasing signs of overbought conditions could hinder growth, but these signs are not yet too evident.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

U.S. Inflation Data: What to Know and What to Expect

A highly anticipated March inflation report from the U.S. is expected today, with analysts predicting a slowdown, partly due to declining energy prices—which has brought some relief to consumers. According

Jakub Novak 12:09 2025-04-10 UTC+2

China Plans Emergency Meeting and a Strong Response to the U.S.

According to media reports, China's top leadership is set to hold an emergency meeting today to discuss additional economic stimulus measures following President Donald Trump's announcement of new tariff hikes

Jakub Novak 12:07 2025-04-10 UTC+2

Trump Suspends Tariffs for 90 Days but Raises Rates on China Even Further

President Donald Trump announced yesterday a 90-day suspension of tariff increases that had affected dozens of trade partners, while simultaneously raising tariffs on China to 125%. The president's policy shift

Jakub Novak 11:57 2025-04-10 UTC+2

Wall Street responding to president's call

Where there's smoke, there's fire. At the start of the second week of April, a rumor spread on social media about a 90-day delay in US tariffs, causing markets

Marek Petkovich 10:58 2025-04-10 UTC+2

Trump Maneuvers in Trade War With China (Potential for Continued Recovery in #SPX and AUD/USD)

The U.S. President continues maneuvering actively, engaging in geopolitics, economics, and global financial markets. Investors are asking: What happened on Wednesday? Why did the White House suddenly announce a truce

Pati Gani 09:56 2025-04-10 UTC+2

What to Pay Attention to on April 10? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Thursday, but the U.S. inflation report still holds some relevance for traders. At the moment, inflation has limited influence because virtually everyone

Paolo Greco 06:49 2025-04-10 UTC+2

GBP/USD Overview. April 10: Trump Meets His Match

The GBP/USD currency pair showed gains and losses throughout Wednesday. The afternoon decline once again raised some questions, though market movements in recent months have lacked much logic. The market

Paolo Greco 03:21 2025-04-10 UTC+2

EUR/USD Overview. April 10: From Prince to Pauper

The EUR/USD currency pair continued to trade higher on Wednesday, once again failing to settle below the moving average line. Donald Trump keeps announcing new tariffs — or previously announced

Paolo Greco 03:21 2025-04-10 UTC+2

The Dollar – A Toxic Currency

Trouble often comes in pairs or groups. The decline of American exceptionalism is only one of the challenges facing EUR/USD bears. The main currency pair remains resilient and occasionally goes

Marek Petkovich 00:59 2025-04-10 UTC+2

GBP/JPY: Down, Only Down

The pound is plummeting against the yen. The cross has dropped by over a thousand points in just one week, reflecting the British currency's weakness and the yen's "crisis resilience."

Irina Manzenko 00:59 2025-04-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.