GBP/USD Price Analysis: BoE Cut Odds Rise After Weak UK Data

Republished By Plato

Followers: 0

British wages minus bonuses grew much slower than expected.
Investors expect a bigger 74bps of cuts by the BoE this year.
Investors are preparing to receive the US CPI report showing the state of consumer inflation.

This Tuesday, the GBP/USD price analysis takes a bearish turn as soft UK labor market data fuels BoE rate cut bets. Meanwhile, the dollar held steady ahead of the US Consumer Price Index (CPI) report, impacting the Fed’s rate cut decision.

–Are you interested in learning more about making money with forex? Check our detailed guide-

Notably, data on Tuesday revealed that British wages minus bonuses grew much slower than expected in the three months to January. At the same time, the unemployment rate unexpectedly increased. This report raised hopes that the Bank of England will start cutting rates this year. As a result, the pound slipped, pulling back sharply from recent highs.

The recent rally in the pound came as traders gained confidence that the Fed would cut rates ahead of the BoE. Markets believe the BoE will be among the last major banks to cut rates. As a result, the pound has strengthened due to the divergence in policy outlooks.

However, after the jobs data, investors expect a bigger 74bps of cuts by the BoE this year. This increase from 67bps before the data brings it closer to the Fed’s 75bps of cuts. This means that the pound is losing some of its edge.

At the same time, investors are preparing to receive the US CPI report showing the state of consumer inflation. A higher-than-expected figure could lower Fed rate cut expectations. Meanwhile, a decline in inflation might raise rate-cut bets.

GBP/USD key events today

US Core CPI m/m
US CPI m/m
US CPI y/y

GBP/USD technical price analysis: Bears challenge uptrend at the 30-SMA support

GBP/USD price analysis — GBP/USD 4-hour chart

On the charts, the pound has fallen to the 30-SMA after failing to trade above the 1.2850 resistance level. Meanwhile, the RSI has broken below 50, showing a shift in sentiment to bearish. With stronger bearish momentum, the price will likely soon break below the 30-SMA to retest the 1.2750 support level.

–Are you interested in learning more about MT5 brokers? Check our detailed guide-

However, the price must break below 1.2750 to confirm a bearish reversal and make lower highs and lows. Still, the bullish trend will continue if the price fails to break below the 30-SMA or the 1.2750. The bulls might make a new high at the 1.2900 key psychological level if they regain momentum.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money