GBPUSD Forecast: Sterling Eyes Third Straight Day of Gains as UK Inflation Cools to Match BOE Target

GBPUSD was on course to register the third successive session of gains on Wednesday, as it rose to 1.2722 after rising by 0.1 percent in the intraday session.

The GBPUSD pair continued its recent gains on Wednesday, rising for the third consecutive session and reaching 1.2722 after a 0.1 percent intraday increase. The pair's gains were supported by the latest UK inflation figures, which showed a decline in line with the Bank of England's target. However, US markets were closed on Wednesday for the Juneteenth holiday, giving the pound an opportunity to capitalize on the weaker dollar.

According to the UK Office of National Statistics, the UK Core CPI (excluding food and energy) rose by 3.5 percent in May, down from April's 3.9 percent and meeting forecast estimates. Headline inflation also decreased from 2.9 percent to 2.0 percent, matching analysts' predictions and the BOE's target. While this decrease reduces the likelihood of the central bank cutting interest rates, it provides support for the GBPUSD currency pair as investors may view the inflation trajectory as positive for UK economic policies.

Furthermore, the UK Producer Price Index rose from -0.3 percent to 0.0 percent, which will likely bolster the pound. On the other hand, the dollar remained under pressure following Tuesday's weaker-than-expected Retail Sales data.

US Retail Sales increased from -0.2 percent to 0.1 percent in May, falling short of the forecast figure of 0.3 percent. This reading reinforced the view that higher-for-longer interest rates have impacted consumers' purchasing power, potentially leading the Fed to consider cutting rates in September.

The sentiment surrounding this data is expected to drive GBPUSD on Wednesday, ahead of the BoE Interest Rate decision on Thursday.

Technical Analysis:

The buyers are currently driving the GBPUSD market, and the upside will likely continue if they maintain the exchange rate above 1.2716. This momentum will likely encounter the first resistance at 1.2734, and further control by the buyers at that point will break the resistance and potentially test 1.2750.

Alternatively, a move below 1.2716 will favour the sellers to take control, and the first support will likely be established at 1.2692. A breach of that support will invalidate the upside narrative and could result in extended losses to test 1.2673.

News source：https://www.kdj.com/cryptocurrencies-news/articles/gbpusd-forecast-sterling-eyes-straight-day-gains-uk-inflation-cools-match-boe-target.html

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