GBP/USD Stuck Below Key Moving Average Amid Fed Expectations
The British pound is facing pressure as it trades below its 20-day exponential moving average (EMA) against the US dollar. This technical indicator suggests near-term bearish momentum for GBP/USD, which is currently hovering around the 1.2700 handle.
Immediate resistance for the pair lies at the 20-day EMA around 1.2750, followed by the 50-day EMA near 1.2800. On the downside, support is seen at the 1.2600 psychological level, with a break below that potentially leading to the 200-day EMA around 1.2500.
The pound's recent weakness comes despite stronger-than-expected UK GDP figures, which showed the economy expanded by 0.4% in the first quarter. However, inflation remains sticky at 3.9% year-on-year, well above the Bank of England's 2% target.
Market speculation suggests that the BoE may be forced to keep rates higher for longer, but the dollar has been supported by expectations that the Federal Reserve will maintain its hawkish stance. Fed officials have repeatedly signaled that they are in no rush to cut rates, citing resilient US labor market data and persistent inflation.