The GBP/USD currency pair has been growing for 6 consecutive trading sessions. Yesterday, the British pound was supported by weak data on the US inflation, and today the UK GDP grew more than expected. Thus, the price rally may continue. It’s likely that the price continues the strong trend.
The UK economy contracted less than expected in May. Steady consumer spending and a lull in strikes had a positive impact on the market despite the extra holiday for King Charles III's coronation.
Gross domestic product fell 0.1% in May after rising 0.2% a month earlier, the Office for National Statistics said Thursday. Economists had expected a drop of 0.3%. Manufacturing, services and construction all performed better than expected.
Services that power the bulk of the economy produced no change in May. That exceeded economists’ expectations.
Analysts will keep a close eye on June’s data, noting a strong rebound might indicate underlying strength in economic activity. However, weak data may hint a prolonged downturn has begun.
Nevertheless, the current data is positive for the UK currency.
The US inflation data published yesterday raised hopes that the Federal Reserve's monetary policy tightening would end soon.
The annual rate of the US consumer price growth slowed to 3% in June, to hit its lowest rate in more than two years. Inflation is falling, but not fast enough to encourage the Fed to back off from raising interest rates later this month.
According to the technical analysis, the GBP/USD currency pair continues to update the annual highs. At the same time, the British pound still has room for growth. The RSI indicator has just started entering the overbought zone. Moreover, the increase in the currency pair price in May amounted to 4.3%. Currently it amounts to 3.5%. Thus, the price might gain 0.8% more to reach the target level. The growth target will be the level of 1.31. A Stop-loss should be placed below yesterday's low, which corresponds to the level of 1.298. In this case, the uptrend would be broken.
Growth of the GBPUSD:
Take profit — 1.310
Stop-loss — 1.298
This content is for informational purposes only and is not intended to be investing advice.
