GBPUSD rises 0.3% to 1.32082 on Wednesday amid contrasting economic data from US and UK

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.3%	39.7 Pips
Week to-date	0.53%	70.2 Pips
September	0.31%	40.2 Pips

Upcoming key events (London Time)

Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)
Fri 07:00 AM GBP Retail Sales Volumes (1-mth)

What happened lately

In the United States, recent economic data reveals a significant shift in interest rate projections and actual rates. The Federal Reserve announced that interest rate projections for the next year have dropped to 4.4% from a previous rate of 5.1%, and the 2-year projection also saw a decrease to 2.9% from 3.1%. Longer-term projections have slightly increased to 2.9% from 2.8%, while the 3-year projection remains unchanged at 2.9%. Moreover, the Federal Funds Rate decision came in below forecast, dropping to 5% from the previous 5.5%. The 1-year projection fell notably to 3.4% from 4.1%. These figures point to a more dovish stance from the Federal Reserve. In other data, building permits in August increased to 1.475 million from 1.406 million in July, and housing starts rose to 1.356 million from 1.237 million. Industrial production also saw an increase of 0.8% in August, up from -0.6% in July. On the downside, the Retail Trade Control Group and monthly retail trade excluding automobiles both saw declines, falling to 0.3% and 0.1% respectively.

In the United Kingdom, the economic picture is somewhat mixed. The Retail Price Index (RPI) for August fell slightly to 3.5% from 3.6% in July. However, the Producer Price Index Core Output (PPI) rose to 1.3% from 1%. The Consumer Prices Index (CPI) showed an increase, moving to 0.3% in August from -0.2% in July, and the Core CPI inflation rate climbed to 3.6% from 3.3%. Meanwhile, the Producer Price Index – Output dropped to 0.2% in August from the previous 0.8%. This mixed data reflects some inflationary pressure but also points to certain supply-side price relief.

Given the contrasting economic data from the U.S. and the U.K., the GBPUSD saw a rise of 0.3% to 1.32082 on Wednesday. The decline in U.S. interest rate projections and an actual cut in the Federal Funds Rate imply a softer USD, as lower interest rates generally make the currency less attractive to investors. Concurrently, the U.K. shows rising inflation measures which could prompt the Bank of England to consider tightening monetary policy. The upcoming high-impact events, including the Bank of England Interest Rate Decision and Retail Sales Volumes in the U.K., are likely to further influence the GBPUSD pair. Any indication of rate hikes from the BoE could lend additional support to the British pound, potentially pushing GBPUSD higher. Conversely, any dovish signals could see this trend reversed.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday rose 0.3% to 1.32082. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Wednesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.32853 with break above could target R2 at 1.33625 or figure level area. While towards the downside, we are looking at daily low of 1.31560 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.32978 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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