• The pound recovered ahead of crucial US inflation data later in the day.

• The US economy beat forecasts in the fourth quarter, growing at 3.3%.

• The pound remains steady against the dollar amid signs of a recovery in the UK economy.

On Friday, the GBP/USD price analysis hinted at a modest bullish tone as the pound staged a recovery ahead of pivotal US inflation data. The spotlight is on the US personal consumption expenditures data, the Federal Reserve’s preferred inflation gauge.

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Meanwhile, Thursday’s data indicated that the US economy beat forecasts in the fourth quarter, growing at 3.3%. Consequently, there was a rally in the dollar and a decline in the pound.

The robust fourth-quarter economic performance, driven by strong consumer spending, eased recession concerns. The full-year growth stood at 2.5%. Moreover, the advance report on fourth-quarter gross domestic product revealed a further easing of inflation pressures.

Despite the impressive year-end results, doubts about the Federal Reserve starting to cut rates in March persist. However, March remains a possibility due to the favorable inflation data within the GDP report.

The pound remains steady against the dollar, supported by robust British business activity data earlier in the week. Furthermore, Goldman Sachs analysts noted that the UK’s growth momentum is improving, fueled by the consistent service sector expansion, setting the UK apart from the rest of Europe.

In recent weeks, expectations of the ECB and the Fed to start rate cuts before the Bank of England has bolstered the pound. The BoE is scheduled for a meeting next Thursday.

GBP/USD key events today

• The US Core PCE Price Index report

GBP/USD technical price analysis: Bulls reemerge at channel support

On the charts, the pound is trading in a bullish channel and is bouncing higher after respecting the channel support. The bullish channel is shallow because the price is still trapped in a range between the 1.2800 resistance and the 1.2600 support. For this reason, the price does not respect the 30-SMA as support or resistance. Similarly, the RSI keeps crossing the pivotal 50 mark, showing bears and bulls are battling for control.

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Still, within the channel, the price seems to climb and retest the channel resistance. Such a move would also allow the bulls to retest the 1.2800 resistance.

https://www.forexcrunch.com/blog/2024/01/26/gbp-usd-price-analysis-recovering-to-1-2750-ahead-of-us-pce/