Pound Sterling approaches annual highs on strong UK GDP, BoE rate-cut bets fade

• 
  The
  Pound
  Sterling
  performs
  strongly
  against
  the
  US
  Dollar
  and
  other
  currencies
  on
  faster
  UK
  GDP
  growth
  and
  a
  decline
  in
  BoE
  rate-cut
  prospects.
• 
  The
  UK
  economy
  expanded
  at
  a
  faster
  pace
  of
  0.4%
  in
  May,
  beating
  an
  estimate
  of
  0.2%.
• 
  Investors
  await
  the
  US
  inflation
  data
  for
  fresh
  guidance
  on
  the
  Fed’s
  interest
  rates
  path.

The
Pound

Sterling
(GBP)
rallies
to
near
1.2870
and
approaches
the
year-to-date
high
against
the
US
Dollar
(USD)
in
Thursday’s
London
session.
The
GBP/USD
pair
strengthens
due
to
multiple
tailwinds,
such
as
weakness
in
the
US
Dollar
due
to
firm
speculation
that
the

Federal
Reserve
(Fed)
will
begin
reducing
interest
rates
in
September
and
an
upbeat

outlook
for
the
British
currency
amid
easing
Bank
of
England’s
(BoE)
early
rate
cut
bets
and
strong
United
Kingdom
(UK)
Gross
Domestic
Product
(GDP)
report
for
May.

The
US
Dollar
Index
(DXY),
which
tracks
the
Greenback’s
value
against
six
major
currencies,
falls
back
after
failing
to
extend
recovery
above
the
immediate
resistance
of
105.20.

The
Greenback
comes
under
pressure
as
Fed
Chair
Jerome
Powell
signalled
some
disinflation
progress
in
his
semi-annual
Congressional
testimony
comments.
Powell
refrained
from
announcing
a
victory
over
inflation
but
assured
that
policymakers
are
very
focused
on
the
path
toward price
stability.

In
Thursday’
session,
investors
will
keenly
focus
on
the

United
States
(US)

Consumer
Price
Index
(CPI)
for
June,
which
will
provide
cues
about
potential
market
expectations
for
Fed
rate
cuts
in
September.
Economists
expect
that
the
core
inflation,
which
excludes
volatile
food
and
energy
items,
grew
steadily
by
0.2%
and
3.4%
on
monthly
and
annual
basis,
respectively.
Annual
headline
inflation
is
estimated
to
have
decelerated
to
3.1%
from
May’s
reading
of
3.3%,
while
the
monthly
figure
is
expected
to
have
grown
by
0.1%
after
remaining
unchanged
previously.

Daily
digest
market
movers:
Pound
Sterling
outperforms
against
its
peers
on
multiple
tailwinds

• The
  Pound
  Sterling
  outperforms
  its
  major
  peers
  on
  Thursday
  as
  the
  UK
  economy
  grew
  at
  a
  faster
  pace
  in
  May
  and
  the
  maintenance
  of
  a
  hawkish
  stance
  by
  BoE
  policymakers.
  UK’s
  Office
  for
  National
  Statistics
  (ONS)
  has
  reported
  that
  the
  economy
  expanded
  strongly
  by
  0.4%
  from
  the
  estimates
  of
  0.2%
  and
  a
  stagnant
  performance
  recorded
  in
  April.
• The
  UK
  ONS
  also
  showed
  that
  monthly
  Industrial
  and
  Manufacturing
  Production
  grew
  in
  line
  with
  expectations
  after
  contracting
  in
  April,
  while
  annual
  figures
  missed
  estimates.
  Monthly
  Industrial
  and
  Manufacturing
  Production
  rose
  by
  0.2%
  and
  0.4%,
  respectively.
  Annually,
  Industrial
  and
  Manufacturing
  Production
  grew
  at
  a
  slower
  pace
  of
  0.4%
  and
  0.6%,
  respectively.
  The
  factory
  data
  has
  returned
  to
  a
  positive
  trajectory
  after
  contracting
  at
  a
  stronger
  pace
  in
  April,
  suggesting
  a
  strong
  recovery
  in
  the
  domestic
  and
  overall
  demand
  for
  factory
  products.
• Meanwhile,
  Bank
  of
  England
  (BoE)
  policymakers
  have
  pushed
  back
  expectations
  of
  rate
  cuts
  in
  August.
  On
  Wednesday,
  BoE
  policymaker
  Catherine
  Mann
  warned
  that
  the
  decline
  in
  annual
  headline
  inflation
  to
  the
  2%
  target
  was
  merely
  a
  “touch
  and
  go”.
  Mann
  added
  that
  price
  pressures
  could
  rise
  again
  and
  remain above
  the
  required
  rate
  for
  the
  rest
  of
  the
  year.
  She
  indicated
  that
  her
  stance
  would
  remain
  hawkish
  until
  she
  sees
  a
  sustained
  decline
  in
  service
  inflation
  and
  wage
  growth.
• This
  week,
  BoE
  policymaker
  Jonathan
  Haskel
  also
  maintained
  hawkish
  guidance
  on
  interest
  rates
  due
  to
  sticky
  wage
  growth.
  Haskel
  said: “I
  would
  rather
  hold
  rates
  until
  there
  is
  more
  certainty
  that
  underlying
  inflationary
  pressures
  have
  subsided
  sustainably”,
  Reuters
  reported.

Pound
Sterling
Price
Today:

Technical
Analysis:
Pound
Sterling
sets
for
inverted
H&S
breakout

The
Pound
Sterling
approaches
a
fresh
annual
high
against
the
US
Dollar
near
1.2870.
The
GBP/USD
pair
is
expected
to
extend
its
upside
as
it
is
on
the
verge
of
an
inverted
Head
and
Shoulder
(H&S)
breakout.
The
neckline
of
the
above-mentioned
chart
pattern
is
plotted
near
1.2850,
and
a
breakout
of
the
H&S
formation
results
in
a
bullish
reversal.

Advancing
20-day
Exponential
Moving
Average
(EMA)
near
1.2747 suggests
that
the
near-term
trend
is
bullish.

The
14-day
Relative
Strength
Index
(RSI)
established
into
the
bullish
range
of
60.00-80.00,
indicating
that
the
momentum
has
leaned
to
the
upside.