- GBP/USD gains ground for the fourth day in a row and hits a new all-time high.
- Expectations of an imminent Fed rate hike pause weigh on the dollar and remain supportive.
- Acceptance above 1.2500 favors bulls and supports prospects for further gains.
The pair GBP/USD gains positive traction for the third day in a row on Thursday and rises to the 1.2530 zone, or its highest level since June 2022, during the early American session.
US dollar (USD) selling picks up after the softer-than-expected US Producer Price Index (PPI) release turns out to be a key factor pushing GBP/USD higher. In fact, the US Bureau of Labor Statistics reported that the US PPI fell to the rate of 2.7% yoy in March from 4.9% previously (revised down from 4.6%). The annual core PPI, for its part, fell to 3.4% during the reported month from 4.5% in February, coinciding with the analysts’ estimate. On a monthly basis, the PPI and Core PPI stood at -0.5% and -0.1%, respectively.
This data comes after the US CPI reported on Wednesday that disinflation is progressing smoothly, reaffirming expectations that the Federal Reserve (Fed) will soon break its rate hike cycle. Furthermore, markets now expect the US Central Bank to start cutting rates during the second half of the year, resulting in a further decline in US Treasury yields. Aside from this, there is a generally positive tone in equity markets, reducing demand for the safe-haven dollar and supporting GBP/USD.
These factors largely overshadow the disappointing UK macroeconomic data released on Thursday. In fact, the UK Office for National Statistics reported that economic growth held steady in February, against an estimated 0.1% increase. In addition, the UK Manufacturing and Industrial Production figures missed expectations, dwarfing the Trade Balance data, which came in better than expected. That being said, recent mixed signals from Bank of England policymakers about future rate hikes could limit GBP/USD gains.
From a technical point of view, breaking the previous year’s high and accepting above the key psychological 1.2500 level could be seen as a new trigger for bullish traders. This, in turn, supports the prospects for a further appreciation move in the near term. Therefore, some trailing force, towards a recovery around the 1.2600 round figure, looks like a definite possibility.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
