The GBP/USD exchange rate has been in a strong uptrend this year, and a unique chart pattern points to more gains in the coming months. It bottomed at 1.2100 earlier this year and reached a high of 1.3593. This article explores what to expect in the coming weeks.
US nonfarm payrolls and CPI data ahead
The GBP/USD exchange rate will be in the spotlight in the next few days as the UK and the US are set to deliver key economic numbers.
The US will kick it off on Friday when it publishes the latest nonfarm payrolls (NFP) data. Economists expect the data to show that the labor market remained under pressure in May as companies moved into cash-preservation mode because of tariffs.
The average estimate is that the economy created 130,000 jobs in Ma after adding 177k a month earlier. Some analysts, however, expect the NFP figure to be much lower than that, especially after the latest ADP report, which revealed that the economy created just 37k jobs.
The unemployment rate is expected to come in at 4.2%, while the participation rate will be about 62.6%.
US jobs numbers are important because they form part of the Federal Reserve’s dual mandate. A worsening labor market often triggers interest rate cuts as the Fed incentivizes companies to hire.
The most important data will come out next week when the US publishes the latest consumer inflation data. Analysts expect the data to show that inflation rose because of Donald Trump’s tariffs.
The average estimate is that the headline Consumer Price Index (CPI) rose from 2.3% in April to 2.5% in May, while the core figure jumped from 2.8% to 2.9% annually. The month-on-month data are also expected to move upwards from 0.2% to 0.3%.
If these numbers are correct, they mean that the Federal Reserve will maintain a wait-and-see approach on interest rates. Officials want to see the impact of Trump’s tariffs on inflation before starting to cut rates.
Read more: ‘Not in a sweet spot’: JPMorgan’s Dimon sounds alarm on US stagflation, backs Fed’s rate hold
UK macro numbers ahead
The GBP/USD exchange rate will also react to macro data from the United States. A key data to watch will be the BRC retail sales monitor on Tuesday. Economists expect the data to reveal that retail sales did well in May.
The Office of National Statistics (ONS) will then release the latest jobs numbers on Tuesday. Economists expect the data to reveal that the unemployment rate remained at 4.5%, as the economy created 80k jobs in the three months to April.
The ONS will publish the latest GDP, manufacturing and industrial production, and trade numbers after this.
These numbers will likely have a minimal impact on the Bank of England (BoE) monetary policy. Analysts anticipate that the bank will cut interest rates about 2 or three more times this year.
GBP/USD technical analysis
GBPUSD chart | Source: TradingView
The daily chart shows that the GBP/USD exchange rate has been in a strong uptrend in the past few months. It jumped above the important resistance level at 1.3430, the upper side of the cup-and-handle pattern. This pattern has a depth of about 10%.
Measuring 10% from the cup’s upper side shows that the target price is 1.4797. The other bullish case for the pair is that it remains above the 50-day and 200-day Exponential Moving Averages. These two averages crossed each other in March, forming a golden cross pattern.
This outlook matches with the recent US dollar index forecast by Morgan Stanley which expects it to keep falling,
The bullish GBPUSD forecast will become invalid if it drops below the 50-day moving average at 1.3288.
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