US Dollar Forecast: GBP/USD Eyes 50-Day SMA Ahead of US CPI
US Dollar Outlook: GBP/USD
GBP/USD extends the advance from monthly low (1.2446) to carve a series of higher highs and lows, but the recent recovery in the exchange rate may unravel if it responds to the negative slope in the 50-Day SMA (1.2596).
US Dollar Forecast: GBP/USD Eyes 50-Day SMA Ahead of US CPI
Keep in mind, GBP/USD failed to defend the opening range for May as the Bank of England (BoE) voted 7 to 2 to keep the Bank Rate at 5.25%, and it seems as though the majority are in no rush to switch gears as ‘monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term.’
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
As a result, GBP/USD may face range bound conditions as the Monetary Policy Committee (MPC) ‘remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably,’ but data prints coming out of the UK may lead to a greater dissent within the BoE as the Employment Change report is anticipated to show another rise in claims for unemployment benefits.
UK Economic Calendar
The UK Claimant Count rate is expected to print at 13.9K in April following the 10.9K reading the month prior while the Unemployment Rate is seen widening to 4.3% from 4.2% during the same period, and signs of a weakening labor market may produce headwinds for the British Pound as it puts pressure on the BoE to adopt a less restrictive policy.
However, a better-than-expected UK Employment report may generate a bullish reaction in GBP/USD as it raises the BoE’s scope to further combat inflation, and the exchange rate may stage a larger recovery ahead of the update to the US Consumer Price Index (CPI) as it carves a series of higher highs and lows.
US Economic Calendar
Looking ahead, the US CPI may also sway GBP/USD as both the headline and core reading are anticipated to show slowing inflation, and evidence of easing price growth may spark a bearish reaction in the Greenback as it reinforces expectations for a rate cut in 2024.
At the same time, a stronger-than-expected CPI report may curb the recent recovery in GBP/USD as it puts pressure on the Federal Reserve to keep US interest rates higher for longer, and the exchange rate may struggle to retain the advance from the monthly low (1.2446) should it snaps the recent series of higher highs and lows.
With that said, GBP/USD may respond to the negative slope in the 50-Day SMA (1.2596) if it struggles to trade/close back above the moving average, but the exchange rate may track the April range as both the BoE and Fed endorse a data-dependent approach in managing monetary policy.
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Strategist; GBP/USD on TradingView
- GBP/USD approaches the 50-Day SMA (1.2596) as it extends the rebound from the monthly low (1.2446), with a break/close above 1.2630 (38.2% Fibonacci retracement) opening up the April high (1.2710).
- Next area of interest comes in around 1.2760 (61.8% Fibonacci retracement) to 1.2830 (23.6% Fibonacci retracement), but GBP/USD may respond to the negative slope in the moving average if it struggles to test the monthly high (1.2635).
- A close below 1.2470 (50% Fibonacci retracement) may push GBP/USD towards 1.2390 (38.2% Fibonacci extension), with the next region of internet coming in around 1.2300 (50% Fibonacci retracement) to 1.2320 (61.8% Fibonacci retracement), which incorporates the yearly low (1.2300).
Additional Market Outlooks
US Dollar Forecast: EUR/USD Negates Bear Flag Formation
US Dollar Forecast: USD/CAD Ascending Channel Remains Intact
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2026