3 key factors push GBPUSD to continue its bullish outlook
Actualizado
Since the beginning of this year, the pound has been one of the best performing currencies. There are three factors that are driving sterling's strength and these are likely to continue to support gains in sterling over the medium term.
1. Interest rate difference
Interest rate differentials are the main fundamental driver of currencies and are currently having a positive impact on GBP.
The real interest rate in the UK is 3.25%, compared to 2.5% in the US. Rising real interest rates in the UK relative to the US are currently driving GBP/USD strength and this is likely to strengthen further.
Currently, the probability of the Fed cutting interest rates in September is 90% and the market currently expects the Fed to cut interest rates more than twice this year. For comparison, the probability of the Bank of England cutting interest rates in August is 57% and the market expects the UK to cut interest rates less than twice this year.
2. Forecasting economic growth and inflation
The UK's growth outlook has improved in recent weeks. After flat GDP growth in April, GDP growth in May was 0.4%, contrary to the 0.2% growth forecast.
It also reduces the possibility of the Bank of England cutting interest rates, because it is unlikely that the Bank of England cuts interest rates while raising GDP and CPI estimates.
The Bank of England may wait until the new government's first budget before cutting interest rates, which could also benefit sterling, especially as high interest rates do not appear to be a deterrent the UK's continued recovery since last year, when the economy entered recession.
3. Political risks
Political risks that have limited sterling's rise in recent years are likely to decline as the Labor government enacts pro-growth policies and builds closer ties with the EU.
This will not boost sterling in the short term and its impact on the currency is difficult to predict.
However, with the UK now looking politically stable, especially compared to France and the US, sterling is likely to attract "safe haven" funds in the coming months.
GBPUSD technical outlook analysis
Temporarily, GBP/USD's upside momentum is being limited by the upper edge of the price channel and the 1.29959 technical level but in the overall picture, GBP/USD has no technical factors bringing pressure.
However, the Relative Strength Index is folding at the overbought level, showing that the room for growth is no longer strong and it is possible that GBP/USD will face some corrections without affecting the trend. main increase.
In the short term, the nearest support level is at the 0.618% Fibonacci extension point, which if GBP/USD falls below this level it will tend to correct downwards to test the price point of 1.28924 in the short term.
On the other hand, once GBP/USD breaks the 1.29959 resistance level it will be eligible for a new bullish cycle with the target level then at 1.30519 price points of the 0.786% Fibonacci extension.
During the day, the bullish outlook for GBP/USD remains unchanged with a correction to be noticed by the following price points.
Support: 1.29582 – 1.28924
Resistance: 1.29959 – 1.30519
1. Interest rate difference
Interest rate differentials are the main fundamental driver of currencies and are currently having a positive impact on GBP.
The real interest rate in the UK is 3.25%, compared to 2.5% in the US. Rising real interest rates in the UK relative to the US are currently driving GBP/USD strength and this is likely to strengthen further.
Currently, the probability of the Fed cutting interest rates in September is 90% and the market currently expects the Fed to cut interest rates more than twice this year. For comparison, the probability of the Bank of England cutting interest rates in August is 57% and the market expects the UK to cut interest rates less than twice this year.
2. Forecasting economic growth and inflation
The UK's growth outlook has improved in recent weeks. After flat GDP growth in April, GDP growth in May was 0.4%, contrary to the 0.2% growth forecast.
It also reduces the possibility of the Bank of England cutting interest rates, because it is unlikely that the Bank of England cuts interest rates while raising GDP and CPI estimates.
The Bank of England may wait until the new government's first budget before cutting interest rates, which could also benefit sterling, especially as high interest rates do not appear to be a deterrent the UK's continued recovery since last year, when the economy entered recession.
3. Political risks
Political risks that have limited sterling's rise in recent years are likely to decline as the Labor government enacts pro-growth policies and builds closer ties with the EU.
This will not boost sterling in the short term and its impact on the currency is difficult to predict.
However, with the UK now looking politically stable, especially compared to France and the US, sterling is likely to attract "safe haven" funds in the coming months.
GBPUSD technical outlook analysisTemporarily, GBP/USD's upside momentum is being limited by the upper edge of the price channel and the 1.29959 technical level but in the overall picture, GBP/USD has no technical factors bringing pressure.
However, the Relative Strength Index is folding at the overbought level, showing that the room for growth is no longer strong and it is possible that GBP/USD will face some corrections without affecting the trend. main increase.
In the short term, the nearest support level is at the 0.618% Fibonacci extension point, which if GBP/USD falls below this level it will tend to correct downwards to test the price point of 1.28924 in the short term.
On the other hand, once GBP/USD breaks the 1.29959 resistance level it will be eligible for a new bullish cycle with the target level then at 1.30519 price points of the 0.786% Fibonacci extension.
During the day, the bullish outlook for GBP/USD remains unchanged with a correction to be noticed by the following price points.
Support: 1.29582 – 1.28924
Resistance: 1.29959 – 1.30519
Nota
Although the monetary policy differences between the US Federal Reserve (Fed) and the Bank of England (BoE) are still the main factor creating fluctuations in GBP/USD, the return of the USD on a large scale due to risk aversion has ruined the "party" of the British pound.Nota
Nota
GBPUSD hit a yearly high of 1.3429 during the Asian session before turning lower. The subsequent decline took the pair back to support at 1.3358. GBPUSD is trading around 1.3385. Resistance is at 1.3411.Nota
During the European session on Thursday, GBP/USD rebounded to around 1.2935, recovering impressively from the 11-week bottom at 1.2830 set the previous day.
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🧩Forex signals have a high win rate
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