Photo by Colin Watts on Unsplash 
 

GBPUSD is trading back up towards the YTD highs today, extending gains seen across the back of last week, as sentiment towards the UK currency turns more favorable. The latest set of figures from the CBI showed an upward revision to UK GDP forecasts for this year and next. These now sit at 0.4% and 1.8% respectively, echoing the upward revisions issued by the OECD last week.
 

GBP Bullish View

Inflation cooled sharply in the UK last month and is expected to continue to fall moving forward, adding to the improved growth outlook. While the BOE is still expected to hike further this month, the sharp drop in inflation is raising questions over a potential shift in outlook. If the BOE is seen adopting a less hawkish forward bias, this might still see GBP remain well bid near-term. Elevated inflation and tighter monetary conditions have been the key headwinds to growth this year meaning that, if it seems a BOE pause is finally coming, the focus might remain on improved growth prospects.
 

Technical Views

GBPUSD

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The rally in GBPUSD has seen the pair trading back above the 1.2437 level with price now retesting the bull channel top. With momentum studies turned bullish again the focus is on a continuation higher and a test of the 1.2659 level next. This is a key level for the pair with a break here signalling a strong bullish development in the market. 

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