• Data showed that US import prices jumped 0.9% last month.

• Fed policymakers have maintained a cautious stance since the inflation report.

• Data revealed a smaller-than-expected drop in unemployment claims.

The GBP/USD price analysis on Friday is slightly bullish as the dollar recovers after signs that inflation remains a concern. However, the general market sentiment showed higher expectations for Fed rate cuts, which weighed on the dollar in the last few sessions.

The dollar rose from Thursday after data showed that US import prices jumped 0.9% last month, raising inflation concerns. Imported inflation could make the Fed hesitate to cut interest rates too early. However, this report followed the US CPI report, which showed that economic inflation was easing. Consequently, Fed rate cut bets are still up. Moreover, investors expect at least two rate cuts this year, one in September and another in December.

Meanwhile, although investors are more convinced of a cut in September, Fed policymakers have maintained a cautious stance since the inflation report. Despite the decline, Thomas Barkin said that inflation was still not where it should be. Meanwhile, Loretta Mester noted that the Fed’s current restrictive policy will help lower inflation to the central bank’s target.

Further support for the dollar came after the US Labor Department revealed a smaller-than-expected drop in unemployment claims. Notably, jobless claims fell to 222,000, coming above forecasts for a decline to 220,000. This indicated strength in the labor market. Despite the recent cooling in US jobs figures, there has been no confirmation that the downtrend will continue. Therefore, there is still a risk that the resilience will continue, keeping the Fed cautious.

GBP/USD key events today

Investors don’t expect any high-impact releases from the US or the UK as the week ends. Therefore, the pair might make small moves.

GBP/USD technical price analysis: Bullish bias holds amid temporary pullback

On the technical side, the GBP/USD price retreats after retesting the 1.2700 psychological level. However, since the retreat comes amid a bullish trend, it might only be temporary. The bullish bias remains strong because the price sits well above the 30-SMA, and the RSI is in bullish territory.

Therefore, bears might find it difficult to continue beyond the 30-SMA support. Furthermore, solid support is at the 1.2600 key level, where bulls might resume the uptrend. In such a case, the price would return to retest the 1.2700 resistance level.

https://www.forexcrunch.com/blog/2024/05/17/gbp-usd-price-analysis-dollar-rebounds-after-cpi-led-plummet/