GBP/USD: outlook for May 8-12
GBP/USD was fluctuating around 1.2895 during the past week helped by strong UK economic fundamentals and the US dollar weakness.
Economic data from the United Kingdom came out positive: manufacturing, construction, and services PMIs exceeded expectations and showed that British economy is expanding. The early results from the UK local elections show the ruling Conservative Party strengthening its hold on the country. The political background is positive for GBP in the short term.
In the coming days, don’t miss British manufacturing production on Tuesday. In addition, traders await Super Thursday – the day when the Bank of England delivers not only its policy decision but also the Inflation Report, which contains updated growth and inflation forecasts. Officials are expected to keep their benchmark interest rate steady at 25 basis points, but traders will be eager to find out whether the central bank’s view on British economic outlook has improved. If it did, the pound will get new bullish drivers. If it doesn’t, the sterling will decline.
Technically the outlook for GBP/USD is positive as long as it’s trading above 1.2850. Upside targets lie at 1.3000. Above this level, the rally may extend to 1.3165 (38.2% Fibo of the post-Brexit decline). Below 1.2850 support is at 1.2755 and 1.2710.
