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

Bitcoin longing for new highs, but something stymies

Bitcoin was created as a way to preserve value in times of turmoil, especially against the backdrop of weakening fiat currencies. It was believed that the arrival of institutional investors

Marek Petkovich 12:23 2025-06-23 UTC+2

Market fears retaliation

Hope for the best, prepare for the worst. Since the onset of the Israel-Iran conflict, the market seems to have largely ignored the severity of the situation. Investor reaction

Marek Petkovich 10:36 2025-06-23 UTC+2

The U.S. Joins the Iran-Israel War. What's Next for the Markets? (Limited downside potential for #NDX and #SPX contracts possible)

The United States could not abandon its satellite and Middle Eastern proxy—Israel—to face Iran alone. On Sunday, it struck Iran's nuclear facilities, though these strikes failed to achieve their objectives

Pati Gani 09:51 2025-06-23 UTC+2

What to Pay Attention to on June 23? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Monday, though they share a similar nature. Business activity indices for June's services and manufacturing sectors will be released in Germany

Paolo Greco 06:51 2025-06-23 UTC+2

GBP/USD Overview – June 23: Geopolitics vs. Economy

The GBP/USD currency pair traded sluggishly throughout Friday, but one technical factor is worth noting: the price failed to consolidate above the moving average. Thus, technical analysis currently suggests

Paolo Greco 03:50 2025-06-23 UTC+2

EUR/USD Overview – June 23: The U.S. Has Officially Entered the War Against Iran

The EUR/USD currency pair traded with minimal volatility and no clear direction throughout Friday. The upward trend remains intact without any doubt. However, a significant strengthening of the U.S. dollar

Paolo Greco 03:50 2025-06-23 UTC+2

US-EU Negotiations on the Verge of Collapse

As anticipated, this phrase can describe nearly every action taken by Donald Trump. I have consistently argued that the core of any negotiations involving Trump comes down to this

Chin Zhao 00:13 2025-06-23 UTC+2

Iran Preparing a "Long-Term Response" to the US

Only a few hours have passed since the overnight airstrike by American bombers on Iranian nuclear facilities—and already, missiles are flying in the opposite direction. However, they are not targeting

Chin Zhao 00:13 2025-06-23 UTC+2

EUR/USD: Prepare for Price Turbulence

The economic calendar for the upcoming week is packed with important releases and events. However, all of them will be overshadowed by geopolitical developments—or rather, one specific event that took

Irina Manzenko 00:13 2025-06-23 UTC+2

U.S. Dollar: Weekly Preview

The United States brings many important economic events. Additionally, as I have mentioned several times, the ongoing war in the Middle East could greatly influence market sentiment. As a result

Chin Zhao 00:12 2025-06-23 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.