GBP/USD Price Analysis – February 27, 2023

Daily Price Outlook

The GBP/USD pair is currently trading at 1.1959, which reflects a 0.13% increase. The pair has recovered slightly after experiencing two weeks of consecutive drops and has now seen some modest gains during the intraday period, reaching a new high for the day.

MPC Member Broadbent to Speak

On Sunday, February 26, Dominic Raab, the UK's Deputy Prime Minister, expressed optimism about an agreement with the European Union to address post-Brexit trading rules applied to Northern Ireland. Raab stated that the nation "is on the cusp" of striking a new Brexit agreement with Northern Ireland, and negotiations with the EU have made excellent progress.

The optimistic sentiments surrounding the EU-UK Brexit deal on the NI protocol are incentivizing traders before the official announcement. GBP/USD is currently trading at 1.3869, up by 0.12%.

Traders are also awaiting today's speech by Ben Broadbent, the Deputy Governor of the Bank of England, for a clearer direction on GBP. Broadbent will provide the conference's opening comments at the BoE Agenda for Research in London.

UK Final Manufacturing PMI: What to Expect from the Upcoming Release

The market is anticipating that the Bank of England will raise the benchmark interest rate by 25 basis points twice in March and April, reaching a maximum of 4.5%. However, some members of the BoE leadership are concerned that a significant increase in rates could result in an economic slowdown.

Meanwhile, business activity data in the UK is showing bullish signs, with the Composite PMI Index potentially rising from 48.5 to 53.0 points this month, despite predictions of 49.0. It's worth noting that these are preliminary figures, and the final ones will be released on March 1 and 3.

How the Pound is Responding to a Weakening Dollar?

The headline PCE Price Index has increased to 5.4% YoY, causing significant attention to US Personal Consumption Expenditures (PCE). In addition, the more significant Core PCE Price Index, which is the Fed's preferred inflation indicator, has risen to 4.7% YoY from 4.6% the previous year and 4.3% to experts' expectations.

Despite this, the US Dollar Index (DXY) is holding onto slight losses at 105.15 as it consolidates its most recent gains. Furthermore, the United States 10-Year Bond Yield has also fallen around 0.39% in 24 hours, trading at 3.934.

The DXY bulls have acknowledged hawkish Fed bets while updating the multi-day high. However, the absence of significant data and events triggered the recent fall in the price.

Fundamentals in the Spotlight Today

These releases have the potential to significantly affect the pricing of US stock markets today.

    * Core Durable Goods Orders m/m is expected to show a 0.1% increase

    * Durable Goods Orders m/m may experience a 3.7% decrease

    * Pending Home Sales m/m is anticipated to grow by 0.9%.

GBP/USD Price Chart - Source: Tradingview

GBP/USD Intraday Technical Levels

Support      Resistance

1.1942        1.1962

1.1933        1.1973

1.1922        1.1982

Pivot Point: 1.1953

GBP/USD – Technical Outlook

On a technical level, the GBP/USD pair has broken below a symmetrical triangle pattern that was providing support around the $1.1995 level.

As a result of this breakout, the pair is now heading toward its next support level around $1.1920, which is acting as a double bottom support.

If the pair manages to find support at this level, it may rebound, and a break above $1.1920 could send the GBP/USD price toward the $1.1845 level.