GBPUSD Analysis: Economic Optimism Meets Dovish BOE Outlook

GBPUSD Analysis: focus remains on further progress for inflation rates versus the potential for early BOE rate cuts
GBP Construction PMI is back near 2023 highs
GBP GDP is expected to drive out of shallow recession

Contrary to the U.S economic data and Fed rate outlooks, the UK economy strikes a delicate balance between growth and inflation indicators. The BOE’s dovish stand supports the possibility of rate cuts before inflation reaches the 2 percent target, though the option to maintain rates persists.

From the perspective of leading economic growth figures, the GBP Construction PMI reported higher expansion metrics today, reaching a reading of 53, the highest since April 2023. This boosts confidence for the upcoming GDP results on Friday, as investors anticipate growth data beyond the shallow recession recorded in the previous two quarters.
From the perspective of inflation figures, UK CPI has dipped below the US CPI for the first time since 2022, marking its lowest level in two years, and enhancing the confidence for rate cut policies.

GBPUSD Analysis: Daily Time Frame – Logarithmic Scale

From a technical outlook, the bearish reversal of GBPUSD from its March high of 1.2893 has found support on the projected parallel channel bottom of its 6-month uptrend at the low of 1.23. With a climb back up to the mid-channel area, the 1.2635 high exhausted the uptrend with a significant shadow, leaving a question to the following uptrend. Neutral momentum can be interpreted with the relative strength index lying on the 50 level. From a longer-term perspective, a break below the 1.23 low can potentially find support near the 1.2210 and 1.2140 levels. From a positive momentum outlook, a break above the 1.2635 high can find potential resistance near 1.2730 and 1.2880, respectively.

GBPUSD Analysis: 4H Time Frame – Logarithmic Scale

From a 4-hour standpoint, the relative strength index is at a neutral 50 reading as well. Considering two scenarios, a break below the 1.2530 low can potentially find support near the levels of 1.2470 and 1.24. From the upside, short-term resistance can be found near the latest high of 1.2635, with a potential for the next resistance at 1.27.

Reviewing the standpoint of the British Pound with inflation and interest rate figures, the BOE monetary policy and outlook is awaited with dovish anticipation.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.