Technical Analysis

GBP/USD Price Analysis – April 08, 2024

By LonghornFX Technical Analysis
Apr 8, 20243 min

Daily Price Outlook

The GBP/USD currency pair has been experiencing a bearish trend and remained well offered around the 1.2616 level. This downward movement can be attributed to several factors, including heightened expectations for a rate cut by the Bank of England (BoE). Investors are increasingly anticipating that the BoE will begin reducing interest rates, possibly as early as its June meeting, due to signs of easing inflation pressures in the UK economy. Meanwhile, recent data releases from the UK indicate signs of a slowdown in the job market, which also kept the GBP/USD pair down. Furthermore, diminished speculation for Fed rate cuts underpinned the US dollar and contributed to the GBP/USD pair's losses.

Firm BoE Rate Cut Expectations and Impact on GBP/USD Pair:

On the UK front, the expectation of a firm rate cut by the Bank of England has put downward pressure on the British Pound against the US Dollar. Recent data indicating a cooling of inflation pressures in the UK has reinforced these expectations. If the BoE moves to lower interest rates, it could further weaken the Pound as investors adjust their positions in anticipation of looser monetary policy. This could lead to continued bearish trend in the GBP/USD pair as market participants price in the probability of lower interest rates in the UK.

On the data front, recent releases from the United Kingdom, such as reports from the UK’s Recruitment and Employment Confederation and the official Average Earnings Excluding Bonuses, have impacted the GBP/USD pair. These reports indicate slower growth in starting salaries for permanent staff and reduced spending on temporary workers, signaling a slowdown in the UK job market.

Diminished Speculation for Fed Rate Cuts and Support to the US Dollar:

On the other hand, the lower speculation for the Federal Reserve to rate cuts in June has provided support to the US Dollar. Despite previous expectations of rate reductions, recent strong economic data, especially in the labor market, has raised doubts about the necessity for immediate monetary easing. The impressive US employment report, indicating robust labor demand and surpassing payroll figures, has lessened anticipations of Fed rate cuts. Consequently, this has bolstered the US Dollar, leading to a downward trend in the GBP/USD pair as the Dollar gains strength against the Pound.

GBP/USD Price Chart - Source: Tradingview
GBP/USD Price Chart - Source: Tradingview

GBP/USD - Technical Analysis

The British pound (GBP/USD) exhibited slight bearish movement, trading at 1.26317, a marginal decrease of 0.06%. The currency pair is currently hovering around a pivot point of 1.2621, indicating a delicate balance in market sentiment.

The Relative Strength Index (RSI) at 53, coupled with the 50-day Exponential Moving Average (EMA) closely aligning with the current price at 1.2630, suggests a neutral to slightly bullish outlook. These indicators imply that the GBP/USD pair could witness a buying trend, particularly if it sustains above the EMA level.

In conclusion, the GBP/USD appears to be in a phase of consolidation, with potential for upward movement if it breaches the key resistance levels.

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