GBP/USD Price may Slide Further

Pound Sterling to US Dollar

Markets were upbeat and risk appetite returned. The U.S. stock indices rose, gold prices fell and nearing $3,200 /oz as the USD strengthened. The trade truce between the U.S. and China was welcomed by markets as they can negotiate further. Sentiment was also boosted by President Trump's suggestion that he may speak to the Chinese President.

Economic key data

UK wages rose more than expected in March to 5.5%, compared to an expected 5.2%, and the unemployment rate remained steady at 4.5%. High wages may stop the Bank of England from lowering interest rates as they may lead to inflation, strengthening the pound.

Convert Pound Sterling to US Dollar

Key economic data

Today, the markets await the release of the US Consumer Price Index for April. Expectations are for the core CPI to remain stable at 2.8% year-on-year, while the headline inflation rate is expected to hold at 2.4% year-on-year. It's worth noting that the Federal Reserve left interest rates unchanged at its last meeting, and signalled the possibility of keeping them on hold beyond the 90-day grace period initiated by President Trump, during which the announced tariffs were suspended to allow time for trade negotiations. As a result, the Fed members' preference is to wait for the implementation of these tariffs, assess their impact on the US economy and react accordingly.

GBP/USD exchange rate showing reversal

The GBP/USD reached multi-month highs at the end of April last year, before retreating on profit taking to settle into the current trading range of 1.3382 to 1.3047. Earlier this week, the pair failed to hold above the neckline of the head and shoulders pattern at 1.3265, suggesting a potential decline towards the lower end of the current trading range.

A daily close below the lower end of the zone could trigger a bearish move, potentially taking the price towards 1.2775. In this scenario, the support level at 1.2886 should be closely monitored.
Levels to watch in the opposite scenario

A daily close above the upper end of the current trading range would indicate renewed bullish momentum, potentially paving the way for a move towards 1.3607. In this case, resistance at 1.3450 should be taken into account.