GBP/USD Price Analysis: Pound Off Peaks Ahead of Core PCE

• The British pound remains one of the best performing major currencies against the US dollar.

• The Fed is more willing to cut borrowing costs than the Bank of England.

• US GDP figures showed the economy grew by 3.0%.

GBP/USD price analysis is slightly bearish as the pound pulls back from recent highs amid dollar strength. The US dollar strengthened on Thursday after data revealed a robust economy despite high interest rates. However, investors remained cautious ahead of US inflation data on Friday.

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The British pound remains one of the best performing major currencies against the US dollar. It’s up 4% so far this year. The recent rally came as markets bet on more rate cuts in the US than in the UK this year. At the same time, the UK economy has recovered from last year’s slump, brightening the outlook for the future.

Recent comments from policymakers at the Jackson Hole Symposium showed that the Fed was more willing to cut borrowing costs than the Bank of England. At the same time, market expectations point to a total of 100 bps cuts by the Fed and 65 bps by the BoE.

However, this outlook could still change with incoming data. Experts believe the pound is vulnerable as any change could suddenly reverse the trend.

On Thursday, GBP/USD fell as the dollar gained after better-than-expected US economic data. GDP figures showed the economy grew by 3.0%, above estimates of 2.8%. Those numbers erased recession fears and reignited hopes for a soft landing by the Fed.

Meanwhile, jobless claims came in less than expected, revealing a stable labor market. Market participants are now watching the core PCE report for more clues on the outlook for rate cuts.

Key GBP/USD Events Today

• US Core PCE Price Index m/m

GBP/USD Price Technical Analysis: Struggle Below 30-SMA

Technically, the GBP/USD price has broken below the 30-SMA, indicating a possible reversal. However, the RSI remains just above 50, showing that the bulls are still fighting for control. The price reversed direction after a bearish RSI divergence signaled weakness in the uptrend.

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However, the bears found strong support at the 1.3150 level. This allowed the price to go up and retest the recently broken SMA. If the bears remain in charge, the price will make a new low below 1.3150. On the other hand, if the bulls come back stronger, GBP/USD will break above the SMA.

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