Market Analysis

The British Pound (GBP) is holding onto recent gains above the key support level of 1.2700 during Thursday's London session. The GBP/USD pair remains strong as traders scale back expectations that the Bank of England (BoE) will move towards normalizing monetary policy in its June meeting, following a persistent hawkish stance on interest rates for over two years.

Anticipation of BoE rate cuts in June has waned after the April Consumer Price Index (CPI) report showed inflation easing at a slower pace than anticipated. Headline and core inflation both declined, with annual rates at 2.3% and 3.9% respectively. Notably, the service price index, a critical inflation measure, saw a modest decrease to 5.9% from the previous 6.0%, indicating persistent service sector inflation as a barrier to broader disinflation despite wage growth.

In technical terms, the Pound Sterling continues its upward trend, marking its fifth consecutive trading session of gains. The GBP/USD pair has comfortably held above the 61.8% Fibonacci retracement level (from the high of 1.2900 in March to the low of 1.2300 in April), currently at 1.2667.

Market indicators support a bullish outlook, with short to long-term Exponential Moving Averages (EMAs) showing upward slopes, indicative of a strong uptrend. The 14-period Relative Strength Index (RSI) has entered the bullish range of 60.00-80.00, signaling momentum favoring further upside movement.

Paraphrasing text from "FX Street" all rights reserved by the original author.