• UK house prices rose for the first time in over a year in February.

• BoE chief economist Huw Pill said he did not expect rate cuts soon.

• The US manufacturing PMI dropped to 47.8 in February.

The GBP/USD outlook took on a bullish hue as the pair continued its upward trajectory on Monday, propelled by encouraging UK data and the Bank of England’s hawkish remarks from Friday. At the same time, there was poor economic data from the US on Friday. As a result, the pound strengthened as the dollar weakened.

Data from the UK on Friday showed that house prices rose for the first time in more than a year in February. This rise came as mortgage costs declined in anticipation of BoE rate cuts, leading to a recovery in the housing market. This also indicates that the economy is faring much better than expected.

Additionally, the pound got support after BoE chief economist Huw Pill said he didn’t expect rate cuts soon. Notably, most policymakers have maintained that inflation must show a clear downtrend before the central bank starts cutting rates.

Although headline inflation has fallen, core inflation remains persistent, with a slower decline. Therefore, even after the BoE starts cutting rates, policy might remain restrictive. The first BoE rate cut might come in August.

Meanwhile, the outlook for rate cuts in the US brightened after data showed a contraction in the manufacturing sector in February. The US manufacturing PMI dropped to 47.8 in February from 49.1 the previous month.

GBP/USD key events today

Investors will keep absorbing Friday’s releases as there are no major reports today.

GBP/USD technical outlook: Bullish channel’s shallow trend hints at correction

On the technical side, GBP/USD is bullish as it trades above the 30-SMA, with the RSI in bullish territory above 50. At the same time, the price trades in a bullish channel, respecting its support and resistance. The bulls took over after the price bounced off the 1.2600 key psychological level. With bulls in the lead, the next target is at the 1.2700 key level or higher at the channel resistance.

However, the bullish channel is shallow and might be a corrective move. Therefore, bears might be waiting to break out of this channel anytime. If the resistance holds firm, the price will likely decline to retest the channel support.

https://www.forexcrunch.com/blog/2024/03/04/gbp-usd-outlook-bullish-momentum-ahead-of-key-data/