GBP/USD trades with mild losses below 1.2800, Fed holds rate steady

GBP/USD edges lower to 1.2795 after retreating from three-month highs on Thursday.
The Fed kept its benchmark overnight borrowing rate targeted in a range of 5.25%-5.50% on Wednesday, as widely expected.
The UK GDP flatlined in April, arriving at 0% after expanding 0.4% in March.

Lallalit Srijandorn FXStreet

The GBP/USD pair loses some ground near 1.2795 after retracing from three-month highs of 1.2860 during the early Asian session on Thursday. The negative surprise of the US Consumer Price Index (CPI) inflation report in May weighs on the Greenback, but the hawkish hold by the Federal Reserve (Fed) modestly caps the USD’s downside.

Inflation in the United States held flat in May, dragging the US Dollar (USD) lower. The CPI inflation figure eased to 3.3% on a yearly basis in May from 3.4% in April, below the market consensus of 3.4%, the US Bureau of Labor Statistics (BLS) reported on Wednesday. The core CPI, which excludes volatile food and energy prices, increased 3.4%, compared to a 3.6% rise in April and the estimation of 3.5%. On a monthly basis, the CPI was unchanged, while the core CPI increased 0.2% in May.

Furthermore, the Federal Open Market Committee (FOMC) decided to keep its benchmark lending rate in a range of 5.25%-5.50% for the seventh time in a row at its June meeting on Wednesday. The FOMC officials expect just one rate cut this year, down from three in March, according to its most recent economic predictions. The so-called ‘dot-plot’ showed that the median of the FOMC officials revised their forecast of the federal funds rate from 4.6% to 5.1%, towards the end of 2024.

Futures traders are now pricing in a 73% odds of rate cut from the Fed in September, up from 53% before the CPI data released, according to the CME FedWatch tool. Later on Thursday, investors will keep an eye on the US weekly Initial Jobless Claims, along with the Producer Prices Index (PPI) and the Fed's John Williams speech.

On the other hand, the UK economic growth stalls in April, according to a flash reading published by the Office for National Statistics (ONS) on Wednesday. The UK Gross Domestic Product (GDP) came in at 0% in April after growing 0.4% in March, in line with the market consensus. The Bank of England (BoE) will meet on June 20 for the next move of its monetary policy. Investors believe there is little possibility of a rate cut in June and shift their expectations towards August or September.

GBP/USD

Overview
Today last price	1.2795
Today Daily Change	0.0055
Today Daily Change %	0.43
Today daily open	1.274

Trends
Daily SMA20	1.2734
Daily SMA50	1.2606
Daily SMA100	1.2639
Daily SMA200	1.2547

Levels
Previous Daily High	1.2752
Previous Daily Low	1.2706
Previous Weekly High	1.2818
Previous Weekly Low	1.2695
Previous Monthly High	1.2801
Previous Monthly Low	1.2446
Daily Fibonacci 38.2%	1.2734
Daily Fibonacci 61.8%	1.2723
Daily Pivot Point S1	1.2713
Daily Pivot Point S2	1.2687
Daily Pivot Point S3	1.2668
Daily Pivot Point R1	1.2759
Daily Pivot Point R2	1.2778
Daily Pivot Point R3	1.2805

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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