• Markets are fully pricing in two BoE rate cuts by December.

• Data on Thursday revealed a bigger-than-expected expansion in the US economy.

• All eyes are on the US core PCE report.

The GBP/USD price analysis highlights a bearish trend despite a slight recovery ahead of the US inflation data. The pound fell as investors increased expectations for Bank of England rate cuts in the previous session. At the same time, the dollar was steady amid signs the US economy remains resilient.

This week, the Bank of England and the Fed have raised their rate cut expectations. The US central bank’s policy outlook significantly impacts other major central banks. Most of them remained cautious for a long time since US inflation remained high.

Moreover, diverging from the Fed’s policy would mean a weaker currency. Therefore, policymakers prefer to let the Fed lead the way. Although rates have started coming down in Canada and the Eurozone, there was caution due to the Fed’s more hawkish tone.

However, recent US inflation figures have boosted expectations for a cut in September. As a result, investors are more confident that BoE policymakers will cut rates this year. Notably, markets are fully pricing in two BoE rate cuts by December. Meanwhile, there is a 50% likelihood of a cut next week.

Elsewhere, the dollar got a boost after Thursday’s data revealed a bigger-than-expected expansion in the US economy. The GDP grew by 2.8% in the second quarter, well above estimates for a 2.0% expansion. However, the report also revealed softer inflation, keeping bets for a September Fed cut intact. All eyes are now on the core PCE report, which might show an increase from 0.1% to 0.2%.

GBP/USD key events today

• US core PCE price index m/m

GBP/USD technical price analysis: Price hovers near 30-SMA in a shallow bearish trend

On the technical side, the GBP/USD price is in a shallow bearish trend close to the 30-SMA. Meanwhile, the RSI trades in bearish territory but is not reaching the oversold region. This is a sign that bears are holding back or bulls are preventing strong bearish swings.

This slow trend might continue to the 1.2800 support level. However, bulls might take over with a break above the 30-SMA if bears do not gain momentum. Consequently, the price would get a chance to revisit the 1.3050 key level.

https://www.forexcrunch.com/blog/2024/07/26/gbp-usd-price-analysis-weak-upside-ahead-of-us-inflation/