empty
05.06.2024 12:28 AM
The pound has updated a 2-month high and is not going to stop. Overview of GBP/USD

The pound is gaining momentum, and there are at least two reasons for this. The first reason is that after shrinking for two quarters in a row, economic growth has resumed, PMI indices are in expansion territory, and there are good chances that it will continue to rise. This reduces the burden on the Bank of England and could potentially adjust rate cuts plans for in favor of a more gradual trajectory.

This image is no longer relevant

The pace of the UK economic recovery is high, with production levels growing at the fastest rate since early 2022. There is simultaneous growth in production and new orders. Business optimism is rising, but costs are also increasing – inflation in the manufacturing sector has been rising for the fifth consecutive month and has reached its highest level in a year. If costs continue to rise, the BoE will face the threat of another round of inflation growth, making any rate cuts unlikely.

The net volume of consumer lending in April was significantly higher than forecasted, further indicating a shift in consumer sentiment. Consumers are ready to spend more as they feel more confident about their incomes, which is a sign of a pickup in GDP growth in Q2.

The second reason is the accelerated slowdown of the US economy, which might force the Federal Reserve to start lowering rates earlier. The dollar sharply declined across the board on Monday following the release of the ISM manufacturing index. Instead of the expected recovery from 49.2 to 49.6, it fell to 48.7 in May, which the markets interpreted as another sign of an emerging recession. Now, the market is focused on the ISM services index on Wednesday. The forecasts are positive (from 49.4 to 50.5), but if this gauge also falls short of expectations, the dollar could lose even more than it did on Monday, as forecasts for the first Fed rate cut might shift from September to July.

The net long EUR position increased by 1.94 billion, (the second weekly result after the euro) to 2 billion, with growth observed for the fifth consecutive week. Positioning has shifted from neutral to bullish. The price is above the long-term average and is firmly rising.

This image is no longer relevant

The pound reached the target set the previous week. It has not yet managed to consolidate above this level, but everything suggests that the next attempt will be successful. A deep correction is unlikely; we expect growth to resume after a brief consolidation, with the target being the local high of 1.2892, followed by 1.2980/3000. Increasing signs of overbought conditions could hinder growth, but these signs are not yet too evident.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The dollar cannot find a reason to strengthen

The CFTC report showed that expectations for a reversal in the dollar have not materialized. After three weeks of relative stability, during which the total short position

Kuvat Raharjo 19:16 2025-06-03 UTC+2

The Pound Rises Against All Odds

The manufacturing PMI in May came in above expectations, but that was where all the positivity ended — 46.6 points, still below the expansion zone, and there's no talk

Kuvat Raharjo 19:09 2025-06-03 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is showing mixed dynamics: despite the general recovery of the US dollar, the Japanese yen is under pressure from intraday sellers amid a combination of negative factors

Irina Yanina 18:27 2025-06-03 UTC+2

GBP/USD. Analysis and Forecast

The GBP/USD pair is attracting sellers today, pulling back from yesterday's high. This pullback is associated with a moderate strengthening of the US dollar, which is exerting pressure

Irina Yanina 18:24 2025-06-03 UTC+2

Traders Didn't Believe the Japanese Regulator

The Japanese yen lost some ground against the US dollar after Bank of Japan Governor Kazuo Ueda hinted today that the central bank may continue to slow the pace

Jakub Novak 11:16 2025-06-03 UTC+2

Market startles monster

Over time, we get used to everything — the good and the bad. Investors have finally come to terms with the fact that they will have to build businesses under

Marek Petkovich 10:44 2025-06-03 UTC+2

Deteriorating U.S. Economic Conditions Bring Fed Rate Cuts Closer (Potential for Continued Decline in #USDX and EUR/JPY Pair)

Although the market has largely stopped reacting to incoming economic data—especially from the U.S.—and is more focused on the geopolitical and economic moves of Donald Trump, who is steering

Pati Gani 09:52 2025-06-03 UTC+2

Everything Is Still Working Against the U.S. Dollar

Despite U.S. President Donald Trump's efforts to secure more trade agreements, the U.S. dollar continues to decline sharply against several other assets as negotiations with China and Europe falter

Jakub Novak 09:09 2025-06-03 UTC+2

What to Pay Attention to on June 3? A Breakdown of Fundamental Events for Beginners

There are only two macroeconomic reports scheduled for Tuesday. Although the first report looks significant on its own and the second one is directly related to the U.S. labor market

Paolo Greco 06:53 2025-06-03 UTC+2

GBP/USD Overview – June 3: Trump Deals Another Slap to the Dollar

The GBP/USD currency pair surged upward again on Monday. Just as the British pound had started a correction and even consolidated below the moving average line, Trump once again announced

Paolo Greco 04:38 2025-06-03 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.