GBP/USD rises on upbeat sentiment, ahead of key US/UK data

• GBP/USD rises driven by optimistic sentiment and ahead of key economic announcements.
• Upcoming US inflation figures will influence Fed rate cut discussions; Fed officials urge political caution.
• Lower US Treasury yields contribute to the rise of GBP/USD, while the dollar weakens.
• Employment data in the United Kingdom and upcoming statements by Bank of England Governor Bailey will be the subject of attention, although no explicit indications of monetary policy are expected.

The GBP/USD pair advances in the North American session, as market participants await a busy economic calendar on both sides of the Atlantic. At the time of writing, the pair is trading at 1.2637, up 0.09% on the day.

The Pound rises on risk appetite, awaiting US inflation and UK jobs data

The optimism of the markets favors the rise of the Pound, although it remains at known levels. Market participants are keeping an eye on the inflation report in the United States (US) which is expected to fuel speculation about rate cuts by the United States Federal Reserve (Fed). Fed Governor Michelle Bowman was against premature easing of monetary policy, adding that the current monetary stance is appropriate. Meanwhile, Richmond Fed President Thomas Barkin added that inflation is close to the target, but not there yet.

At the time of this writing, the futures market sees the Fed keeping rates unchanged at 5.25%-5.50% at the March meeting, while the odds of a 25 basis point rate cut in May are rising. They stand at 52%. US Treasury Yields are falling, a headwind for the Dollar.

Across the pond, the UK economic calendar will include employment data, with estimates suggesting a mixed report will be released. Bank of England (BoE) Governor Andrew Bailey will cross the wires, although he will not comment on monetary policy.

On monetary policy, the BoE is expected to cut rates by 80 basis points through 2024, down from 110 basis points at the beginning of last week. Consequently, short-term British gilts rose, pushing the pound sterling higher against the US dollar.

GBP/USD Price Analysis: Technical Outlook

GBP/USD has a neutral bias after bouncing below the 200-day moving average (DMA). However, the path of least resistance is skewed to the downside as the RSI remains bearish while the price action shows a series of lower highs/lower lows, which could open the door for a retest. 200-day DMA at 1.2562. A break of 1.2600 would expose this last level, followed by 1.2500. On the other hand, if buyers reclaim the 50-DMA at 1.2672, the path towards 1.2700 will be cleared.