US Producer Price Index (PPI) inflation figures and the University of Michigan’s latest Consumer Sentiment Survey are also slated for the back half of the trading week. US PPI inflation will be printing on Thursday, with key consumer sentiment figures due on Friday. The Bank of England reduced its interest rate by a quarter-point on Thursday, as policymakers judged that higher trade tariffs warrant such action amid slowing inflation. In a three-way split, the Monetary Policy Committee, governed by Andrew Bailey, lowered the bank rate to 4.25 percent.
Market Overview
You may find the analysis on a daily basis with forecasts for the global daily trend. You may also find live updates around the clock if any major changes occur in the currency pair. The NZD similarly faced volatility, dropping to a five-year low before recovering on improved U.S. trade sentiment. With the RBNZ expected to cut rates again, the NZD may struggle to hold gains without stronger economic support. While the long-term trajectory for the yen remains upward amid global uncertainty, the next move will likely be driven by bond market trends and risk sentiment.
On the daily chart, we cansee that GBPUSD is approaching a key resistancezone around the 1.29 handle. That’s where we can expect the sellers to step inwith a defined risk above the level to position for a drop into the 1.26handle. The buyers, on the other hand, will want to see the price breakinghigher to increase the bullish bets into new highs. This gave the greenback a boost although Fed Chair Powell backpedalled on the projections making them a bit less worrying as the central bank remains very data dependent. Moreover, the US Dollar found further support yesterday as the market went into risk-off mode for unclear reasons.
United Kingdom Myfxbook GBPUSD Sentiment
Pound Sterling markets will be waiting until Thursday for the latest batch of UK Gross Domestic Product (GDP) growth figures for the first quarter. Median market forecasts are expecting an upswing in QoQ GDP, anticipating Q1 GDP to rise to 0.6% QoQ versus the previous quarter’s 0.1%. On an annualized basis, forecasts expect last year’s GDP slump to still impact the data, forecasting QoY GDP to ease to 1.2% from 1.5%. The UK unemployment rate edged up and wage growth softened in the first quarter ahead of the rise in payroll taxes, official data revealed on Tuesday. The unemployment rate rose to 4.5 percent in the three months to March, in line with expectations, from 4.4 percent in the three months to February, the Office for National Statistics reported.
GBPUSD Analysis: Pound Potentially Form a Head & Shoulders
- Median market forecasts are expecting an upswing in QoQ GDP, anticipating Q1 GDP to rise to 0.6% QoQ versus the previous quarter’s 0.1%.
- The Myfxbook GBPUSD Sentiment Indicator is a very important tool for traders.
- For now, the battle remains at the broken moving averages—staying below favors sellers, while a recovery above could shift momentum back to the bulls.
- Sterling is pressing higher, with GBP/USD climbing to $1.3404 after slicing through $1.3366 resistance.
- Investors rushed back into risk assets, betting that the worst might be behind us.
The recent strength in the GBP/USD pair was also driven by a weaker US Dollar (USD), which came under pressure following softer-than-expected US inflation data. Attention now shifts to upcoming US economic releases, including the Producer Price Index (PPI) and the University of Michigan’s Consumer Sentiment Survey, both due later this week. Despite the greenback’s slide, downside pressure may be partially limited by recent comments from Federal Reserve officials. Chair Jerome Powell warned that rising tariffs could “intensify inflation while slowing economic growth,” making future policy moves less straightforward. The US Dollar Index (DXY) fell to around $98.30, its weakest level since March 2022, as uncertainty surrounding U.S. trade policy intensified. The decline reflects growing market anxiety following President Trump’s proposal of broad “reciprocal tariffs” on dozens of trading partners.
GBPUSD Exchange Rates Analysis
On the US side, CPI inflation eased slightly in April, with annualized headline inflation falling to a fresh three-year low. As a closely watched and widely traded currency pair, it features the British Pound as the base currency and the US Dollar as the counter currency. For that reason, macroeconomic data from both the United States and the United Kingdom significantly impacts its price. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall.
Yesterday, the US PPI report missed expectations by a big Forex Brokers margintriggering a selloff in the US Dollar as the market started to position into apotentially soft US CPI release today. Founded in 1694, the Bank of England (BoE) is the central bank of the United Kingdom (UK). Known as ‘The old lady of Threadneedle Street’, the bank’s mission is “to promote the good of the people of the United Kingdom by maintaining monetary and financial stability”.
Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you’re a beginner or an expert, find the right partner to navigate the dynamic Forex market. Another significant data release for the Pound Sterling is the Trade Balance. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance. The UKCPI this morning missed estimates across the board as well and raised theprobabilities of a back-to-back cut in September. Most of the initial GBPweakness though has been erased as the selloff in the greenback has beenstronger and in the bigger picture a positive risk sentiment should favour thepound anyway.
- Pound Sterling markets will be waiting until Thursday for the latest batch of UK Gross Domestic Product (GDP) growth figures for the first quarter.
- The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom.
- As always, currency markets are dynamic—and May’s developments underscore the importance of staying informed.
The Japanese yen (JPY) pulled back in early May after a strong avatrade review start to the year. The Bank of Japan left interest rates unchanged and downgraded its growth and inflation forecasts, prompting a modest reversal in USD/JPY. The rapid escalation has stoked fears of a drawn-out economic standoff, weighing on investor sentiment and dampening demand for the dollar as a reserve currency.
The GBP, on the other hand, got under pressure mainly because of the risk-off sentiment and the US Dollar strength. If we go back into risk-on, we should see the greenback losing ground against the Pound again.
This chart, reported by the Commodity Futures Trading Commission (CFTC), reveals the net positioning of commercial traders (often considered the “smart money”) in the GBP futures market. A high ratio indicates a net long position (bullish sentiment), while a low ratio suggests a net short position (bearish sentiment). Monitoring this data can provide a leading indicator of potential shifts in market sentiment. One of the main advantages of using forex sentiment analysis is that it can help traders make more informed trading decisions. By understanding the overall sentiment of the market, traders can better anticipate price movements, identify potential trading opportunities, and manage risk more effectively. The EUR/USD is usually quiet during the Asian session, as economic data influencing the pair is usually released during the European or US sessions.
Connecting the charts: Intermarket analysis
Activity increases as European traders begin their day, leading to heightened trading volume. This activity slows around midday during the European lunch break but picks up again when US markets come online. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. FxPro etoro Traders will not be held liable for any losses resulting from trading activities. Understanding the positioning of “smart money” can offer valuable insights into potential currency movements.
Related pairs
All told, unless we see a sharp volume drop or reversal candle, this cable breakout still looks like it has room to run. On the flip side, if $98 fails to hold, we’re likely looking at the next support zones around $97.78 and $97.27. In recent days, U.S. tariffs on Chinese imports surged from 54% to 125%, while China retaliated by increasing duties on all U.S. goods to 84%. The author has not received compensation for writing this article, other than from FXStreet.