• The BoE implemented its first rate cut last week.
• UK underlying inflation remains high.
• US recession fears eased after upbeat employment data.

The GBP/USD price analysis shows a bullish shift in sentiment as the pound recovers amid improving risk appetite. Notably, fears of a looming US recession eased as data showed the labor market remained solid.

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The pound has had a rough week as markets digested the recent shift in policy for the Bank of England. At the same time, declines came as investors dumped risky assets due to fears that the US economy was heading for a recession.

Last week, the Bank of England cut rates for the first time, indicating increasing confidence that inflation is on a downtrend. However, it was a tight vote of 5-4, indicating that some policymakers felt rates should remain high. Underlying inflation in the UK has remained stubbornly high, keeping policymakers cautious. However, as inflation in the US eases and the Fed nears its first cut, other central banks are taking a more dovish stance.

Elsewhere, data from the US revealed a drop in unemployment claims to an 11-month low of 233,000 last week. Meanwhile, economists had expected claims at 240,000. Jobless claims are a key indicator of the unemployment rate. The previous monthly jobs report raised fears of a recession due to the spike in the unemployment rate. However, this might only be a one-time thing. Policymakers will wait to see incoming data before concluding on the state of the sector.

GBP/USD key events today

Neither the UK nor the US will release high-impact data today. Therefore, the pair might end the week quietly.

GBP/USD technical price analysis: 30-SMA breach signals looming reversal

On the technical side, the GBP/USD price has made a strong bullish move, puncturing the 30-SMA. At the same time, the RSI has pushed above the 50 mark, indicating a shift in sentiment. The previous downtrend weakened when the price reached the 1.2700 key support level. Here, the RSI made a bullish divergence, indicating exhaustion.

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Furthermore, although the price made lower lows and highs, bulls continued making strong candles, indicating a corrective move. At the same time, the price stayed close to the SMA, avoiding large swings. A reversal will allow GBP/USD to revisit resistance levels, including 1.2800 and 1.2900.

https://www.forexcrunch.com/blog/2024/08/09/gbp-usd-price-analysis-pound-rebounds-as-risk-appetite-grows/