Market Analysis
The British Pound (GBP) slipped below the key support level of 1.2800 against the US Dollar (USD) during Thursday's London session. This came after the GBP/USD pair corrected sharply from its recent climb near a three-month high of 1.2860, which was initially driven by the US Consumer Price Index (CPI) report for May, showing lower-than-expected inflation.
The decline in the Pound occurred as the US Dollar rebounded following the latest Federal Reserve (Fed) monetary policy meeting. Fed officials indicated a reduced likelihood of multiple rate cuts this year, citing strong labor market conditions and persistent inflation pressures in the first quarter. The US Dollar Index (DXY), which measures the Greenback against major currencies, strengthened to 104.80 as a result.
The Fed kept interest rates unchanged between 5.25% and 5.50%, noting slower progress in inflation towards its 2% target than previously anticipated. They also revised their forecast for the core Personal Consumption Expenditures Price Index (PCE), the Fed's preferred inflation gauge, to 2.8% for 2024, up from March's projection of 2.6%.
Investor attention on Thursday shifted to the US Producer Price Index (PPI) data for May, scheduled for release at 12:30 GMT. Expectations were for headline producer inflation to rise to 2.5% year-over-year from April's 2.2%, with the core PPI, excluding food and energy prices, expected to show steady growth at 2.4%.
From a technical perspective, the Pound attempted to hold above the 78.6% Fibonacci retracement support level at 1.2770, drawn from the March 8 high of 1.2900 to the April 22 low of 1.2300. Support was reinforced by the 20-day Exponential Moving Average (EMA) near 1.2730, with the 50-day EMA around 1.2670 indicating a positive near-term trend. The 14-period Relative Strength Index (RSI) moved back into the 60.00-80.00 range, suggesting potential upward momentum if stability in this range persists.
Pound Sterling Price Today:
| GBP | USD | EUR | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.04% | -0.00% | 0.32% | 0.10% | 0.21% | 0.14% | 0.06% | |
| USD | 0.04% | 0.03% | 0.33% | 0.12% | 0.23% | 0.18% | 0.09% | |
| EUR | 0.00% | -0.03% | 0.32% | 0.09% | 0.19% | 0.15% | 0.04% | |
| JPY | -0.32% | -0.33% | -0.32% | -0.20% | -0.09% | -0.18% | -0.25% | |
| CAD | -0.10% | -0.12% | -0.09% | 0.20% | 0.11% | 0.05% | -0.03% | |
| AUD | -0.21% | -0.23% | -0.19% | 0.09% | -0.11% | -0.07% | -0.15% | |
| NZD | -0.14% | -0.18% | -0.15% | 0.18% | -0.05% | 0.07% | -0.08% | |
| CHF | -0.06% | -0.09% | -0.04% | 0.25% | 0.03% | 0.15% | 0.08% |
Paraphrasing text from "FX Street" all rights reserved by the original author.