GBP/USD Price Analysis – February 24, 2023

Daily Price Outlook

The GBP/USD pair is currently trading at $1.2023, which represents a 0.08% increase over the last 24 hours. Although the pair is trading slightly higher, there remains some uncertainty in the pricing action surrounding the dollar. Despite this, the pound has managed to make modest gains against the dollar.

The Impact of the US Economy on USD: Trends and Analysis

The release of mixed US economic indicators has caused the US dollar to fluctuate between losses and gains. The dollar index (DXY), which measures the dollar against six major peers, decreased by 0.07% to 104.52.

On the one hand, Q4 GDP came in at 2.7%, which was lower than the expected 2.9%, and Q3's 3.2%, suggesting that the economy was slowing more quickly than anticipated. This raised concerns that rising borrowing costs may be dampening growth and suggested that the US Federal Reserve may adopt a less aggressive stance, which would be negative for the USD.

On the other hand, the Fed's preferred inflation indicator, Core PCE Prices, showed signs of price stickiness in Q4 by coming in at 4.3%, which was higher than the expected 3.9% but still below Q3's 4.7%. This could prompt the Federal Reserve to take a more hawkish stance to combat inflation, which would be positive for the US Dollar.

UK Consumer Confidence: Latest Trends and Insights

According to a report on February 23, GfK's consumer confidence indicator increased by seven points to a minus 38, higher than the forecasted -43. This marked a 10-month high, but it was still very close to the historic lows caused by the cost-of-living issue. Additionally, it was the fastest growth rate since March 2021.

In February, UK household confidence reached its highest level in nearly two years as indications surfaced that the worst period of inflation in four decades would ease.

However, this suggests that spending is likely to continue, which could concern the Bank of England as it decides how much to increase interest rates in its fight against inflation. The actual GfK Consumer Confidence figure came in higher than expected, which benefitted the GBP.

MPC Member Catherine Mann Addresses Interest Rates and Inflation

On February 23, External BOE MPC Member Catherine Mann stated that interest rates in the UK must continue to rise in order to prevent inflation from persisting for too long. Mann, a well-known hawkish member, supported further tightening at upcoming meetings and ruled out the possibility of a pivot in the bank's monetary policy.

As a result, the GBP saw a slight increase in value as another hawkish statement from the BoE's Mann supported the currency.

GBP/USD Intraday Technical Levels

Support      Resistance

1.1980          1.2064

1.1944          1.2112

1.1897          1.2147

Pivot Point: 1.2028

GBP/USD – Technical Outlook

The GBP/USD pair is currently trading sideways, maintaining a narrow range between the $1.1990 and $1.2075 levels. On the 2-hour timeframe, a symmetrical triangle pattern has formed, indicating investor indecision and causing Sterling to trade within a tight range.

If the pair breaks above the $1.2075 mark, it may reach resistance levels of $1.2145 or $1.2220. However, the RSI and MACD indicators are still showing a downtrend, and the 50-day simple moving average is holding steady around the $1.2050 level.

If the pair breaks below the $1.1990 mark, it could lead to a bearish trend, with the Sterling potentially dropping to $1.1920.

Later today, market attention will be on a speech by MPC Member Tenreyro and US New Home Sales.

Related:

    * S&P500 (SPX) Price Analysis – February 23, 2023

    * EUR/USD Analysis – February 23, 2023