GBP/USD Forecast Ahead of the UK GDP data

Summary:

GBP/USD is easing as investors await further cues from the UK GDP data. The pair will also react to UK's industrial production data.

GBP/USD is easing ahead of the UK GDP data. On Wednesday, the currency pair rallying was a reaction to the US inflation data. The US Department of Labor indicated that the headline CPI has risen by 5% in May, compared to the forecasted 4.7% and April’s 4.2%. The figure, which is the highest since August 2008, highlighted the ongoing inflationary pressures. However, the subsequent reaction in the market was an indication that investors have bought in to the Fed’s notion. With the central bank expected to maintain its accommodative monetary policy, the event acted as a bullish catalyst for GBP/USD.

The focus is now on the UK GDP numbers scheduled for release on Friday. Economists expect the economy to have contracted by 6.1% in Q1’21 on a year-on-year basis. The prediction is better than the contraction of 7.8% in Q4’20. On a month-on-month basis, analysts expect the economy to have expanded at a rate of 2.2% as the country reopens. Notably, the figure is higher than the prior month’s 2.1%.

A higher-than-expected reading will boost GBP/USD. Besides, the currency pair will also be reacting to the UK industrial production data and the speech by BoE’s Governor Andrew Bailey.

GBPUSD technical outlook

GBP/USD is trading sideways ahead of the UK GDP numbers. At the time of writing, it was up by 0.01% at 1.4177. On Thursday, it surged from an intraday low of 1.4073 to 1.4178. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages. I expect the pair to surge to 1.4200, where it will experience some resistance. On the flip side, it may decline to find support along the EMAs at 1.4145.