- GBP/USD is trading at levels last seen in October 2024, with recent UK labor data showing wage growth.
- Market participants are watching for cues on the Bank of England’s potential rate cut at the May 8, 2025 meeting, particularly focusing on upcoming inflation data.
- Key technical levels for GBP/USD include resistance at 1.3261, 1.3433, and 1.3500, and support at 1.3100, 1.3000, and 1.2864.
GBP/USD continues to advance, now trading at levels last seen in October 2024. Earlier this morning the Office of National Statistics (ONS) released labor data which showed that wage growth ticked higher.
Regular pay in the UK, not counting bonuses, rose 5.9% year-on-year to £670 per week in the three months leading to February 2025. This was slightly more than the revised 5.8% growth seen before and close to the 6% forecast. Wages in the private sector grew by 5.9%, while public sector wages hit 5.7%, the highest since mid-2024, thanks to recent pay raises showing up in the data.
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By industry, the biggest pay increases were in wholesale, retail, hotels, and restaurants (6.8%), followed by construction (6.2%), services (5.9%), manufacturing (5.7%), and finance/business services (4.8%). After factoring in inflation, real wages went up by 2.1%, the same as in the prior period.
Market participants were no doubt looking for cues and hints at what the Bank of England (BoE) policymakers might do at the upcoming BoE meeting on May 8, 2025. As things stand markets continue to price in around 91% probability of a 25 bps rate cut.
Source: LSEG
Tomorrow we have UK inflation data with a particular emphasis on the UK CPI print and services inflation in particular. Service inflation has been earmarked as the key area of concern for the BoE and another drop here will likely solidify the belief in a rate cut for the May meeting.
Economists expect the UK core CPI to have grown at a steady pace of 3.5% with the headline figure expected to come in at 2.7%.
Technical Analysis – GBP/USD
Looking at GBP/USD from a technical standpoint, the rally to the upside is now a whisker away from a key level of resistance at 1.3261 (August 2024 swing high).
Having made a new high there is a possibility that some form of pullback may occur here but this will largely depend on the US dollar’s performance in the coming days.
Another warning of a potential retracement comes from the period-14 RSI which is starting to show signs of bearish divergence. The RSI has failed to make fresh highs while price action has already printed a fresh high(trading above April 3 swing high) just shy of the key 1.3261 handle. Could this level be the precursor for a retracement?
My only concern here is any retracement may prove a shallow one without a US Dollar recovery.
Immediate resistance rests at 1.3261 before the 2024 yearly high around the 1.3433 handle comes into focus. Beyond that we have to keep an eye on the 1.3500 handle.
Support on the other hand is provided by the 1.3100 and 1.3000 psychological level. A break of 1.3000 could be a sign that bearish pressure is building but a close below the 1.2700 handle would be needed for a change in structure to be confirmed on the daily timeframe. .
GBP/USD Daily Chart, April 15, 2025
Source: TradingView.com
Support
- 1.3100
- 1.3000
- 1.2864
Resistance
- 1.3261
- 1.3433
- 1.3500
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