Bullish view
Bearish view
The GBP/USD exchange rate wavered as market participants reacted to the latest UK jobs report and Kevin Warsh’s confirmation hearings in Washington. It was trading at 1.3510 on Wednesday as focus shifted to the upcoming UK inflation report.
UK Consumer Inflation Report and Kevin Warsh Confirmation Hearings
The GBP/USD pair has remained in a narrow range in the past few days, a trend that continued after the UK published the latest jobs data.
A report by the Office of National Statistics (ONS) showed that the unemployment rate dropped unexpectedly as fewer students looked for work. It dropped to 4.9% from the previous 5.2%. The economy added 25k jobs in February after adding 84k in the previous month.
The UK will publish the latest consumer inflation report on Wednesday. Economists expect the upcoming report to show that the headline CPI rose from 0.4% to 0.6% MoM, and from 3% to 3.2% YoY.
Core inflation, on the other hand, is expected to come in at 3.2%, higher than the Bank of England’s 2%. The Retail Price Index (RPI) is expected to come in at 3.9% from the previous 3.6%.
Therefore, analysts expect the Bank of England (BoE) to hold interest rates unchanged through 2026 as it balances high inflation and slowing economic growth. In a statement to the Financial Times, Andrew Bailey noted that the bank will only raise rates in periods of a severe supply shortage.
The GBP/USD pair also reacted to the hearings of Kevin Warsh, who is expected to become the next Federal Reserve Chairman. In his statement, he maintained that he will not be a puppet for President Donald Trump, who has pushed Jerome Powell to cut interest rates aggressively.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair has rebounded in the past few weeks, rising from a low of 1.3162 in April to the current 1.3500. It has jumped above the 50-day Exponential Moving Average (EMA).
The pair has also formed several inverted head-and-shoulders pattern, a common bullish reversal sign in technical analysis. It recently retested the key support level at 1.3475, its highest point in March.
The pair has also formed a bullish flag pattern. Therefore, the pair will likely keep rising as bulls target this month’s high of 1.3595. A move above that level will point to more gains, potentially to the psychological level of 1.3700.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
