GBPUSD rises to 1.32783 amid mixed economic signals in the UK and the US

GBPUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.6%	78.6 Pips
Week to-date	1.07%	140.3 Pips
September	0.85%	112.2 Pips

Upcoming key events (London Time)

Fri 07:00 AM GBP Retail Sales Volumes (1-mth)

What happened lately

In the U.K., GfK Consumer Confidence for September declined significantly to -20 points from -13 points in August, indicating a downturn in consumer sentiment (Source: GfK). The Bank of England decided to keep the interest rate unchanged at 5% (Source: Bank of England), reflecting a cautious approach amidst economic uncertainties. Various inflation indicators showed mixed results; the Retail Price Index for August slightly fell to 3.5% from 3.6% in July (Source: Office for National Statistics). The Producer Price Index – Output dropped to 0.2% from 0.8% in July (Source: Office for National Statistics). Conversely, PPI Core Output rose to 1.3% from 1%, and the Consumer Prices Index (CPI) saw an increase to 0.3% from -0.2% month-on-month, with the Core CPI Inflation Rate jumping to 3.6% from 3.3% year-on-year (Source: Office for National Statistics).

In the U.S., the Manufacturing Business Outlook Survey improved in September, rising to 1.7 points from -7 points in August, signaling a positive shift in manufacturing sentiment (Source: Philadelphia Fed). Initial Unemployment Insurance Claims also fell to 219K from 231K in the previous week (Source: Department of Labor). The Federal Reserve’s interest rate projections were revised downwards, with the federal funds rate now at 5% compared to 5.5%, and the first-year projection dropping significantly to 3.4% from 4.1% (Source: Federal Reserve). This dovish outlook was somewhat balanced by positive housing data; Building Permits increased to 1.475 million from 1.406 million and Housing Starts rose to 1.356 million from 1.237 million in July (Source: Census Bureau).

The diverging economic narratives between the U.K. and the U.S. have implications for the GBP/USD currency pair. The decrease in consumer confidence and mixed inflation data in the U.K. could put downward pressure on the British Pound. However, the Bank of England’s decision to maintain its interest rate might provide some stability. On the other hand, the U.S. exhibited stronger manufacturing and housing data coupled with a dovish Federal Reserve stance on interest rates, which could weaken the U.S. Dollar. This combined scenario might explain the recent rise in GBP/USD to 1.32783, as the market reacts to stronger economic indicators from the U.K. relative to the dovish outlook from the U.S. Federal Reserve.

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What can we expect from GBPUSD today?

GBPUSD on Thursday rose 0.6% to 1.32783. Price is above 9-Day EMA while Stochastic is falling.

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

Looking ahead for the day, immediate upside resistance level is R1 at 1.33439 with break above could target R2 at 1.34095 or figure level area. While towards the downside, we are looking at daily low of 1.31529 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.33140 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is bullish as the pair continued to trade higher and is up by 1.07% over the past few days.

Key levels to watch out:

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