Stronger-than-expected UK GDP numbers lift Cable to a four-month high
On Thursday, the British pound (Cable) reached a new four-month high in European trading, buoyed by better-than-expected UK GDP numbers for May. This dampened expectations of a rate cut by the Bank of England next month
The renewed strength pushed through critical barriers at 1.2846/60 (200-week moving average / former high from June 12) and is now pressuring the key resistance at 1.2893, which is the 2024 high posted on March 8
The technical outlook remains bullish on the daily chart, with the Tenkan and Kijun-sen lines forming a bullish cross and momentum strengthening. However, resistance near 1.2893 is anticipated due to overbought conditions and the significance of this barrier
Attention is now shifting towards the release of the US June inflation report, expected to provide fresh market signals
If US CPI numbers are weaker than expected, the pound could gain further as lower consumer prices would increase the likelihood of a rate cut by the Federal Reserve, weakening the dollar. This scenario could propel Cable above 1.2900, potentially challenging the psychological 1.30 barrier
Conversely, if US inflation rises in June, the bullish momentum might falter
Initial support lies at the session low of 1.2845, followed by 1.2800/1.2780 (psychological level / daily higher base), and further down at 1.2760/53 (rising 10-day moving average / broken Fibonacci 76.4% retracement of 1.2893/1.2299)
Res: 1.2893; 1.2900; 1.2950; 1.3000
Sup: 1.2845; 1.2800; 1.2780; 1.2753
