Market Analysis

The Pound Sterling (GBP) is under pressure during Friday’s early London session, with its recovery from a four-day low near 1.2680 appearing to have stalled. The GBP/USD pair is trading cautiously as investors await the United States core Personal Consumption Expenditure (PCE) Price Index data for April, due at 12:30 GMT.

The core PCE Inflation data, the Federal Reserve’s (Fed) preferred inflation measure, is projected to have increased by 0.3% month-on-month and 2.8% year-on-year. Investors will closely watch this data for clues on the Fed’s potential rate-cut decisions.

If the data meets expectations, it is unlikely to change the anticipation of rate cuts in the September meeting, as Fed policymakers require consistent evidence of declining inflation before considering policy normalization. A higher-than-expected inflation reading could dampen market speculation about the Fed reducing interest rates in November as well, while lower figures would enhance the likelihood of a rate cut in September.

Technical Analysis: Pound Sterling Holds Above 1.2700

The Pound Sterling is showing a subdued performance against the US Dollar ahead of the US core PCE Price Index release for April. The near-term outlook for the GBP/USD pair remains positive as it maintains support at the 61.8% Fibonacci retracement level, drawn from the March 8 high of 1.2900 to the April 22 low of 1.2300, around 1.2670.

The Cable is expected to continue its bullish trend, with all short-to-long-term Exponential Moving Averages (EMAs) indicating an upward slope. However, the 14-period Relative Strength Index (RSI) has slipped into the 40.00-60.00 range, suggesting that the previous upward momentum has temporarily faded.

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