GBP/USD prints bullish consolidation near 1.2600 on uninspiring UK GDP, Fed in the spotlight

• GBP/USD seesaws around five-week high after mixed UK data dump.
• UK GDP improves in April but Manufacturing, Industrial Production fail to impress Cable bulls.
• Increasing odds of BoE rate hike versus Fed’s pause to 1.5-year-old rate increase cycle keeps Pound Sterling buyers hopeful.
• Fed policymakers need to dump calls of more rate hikes, revise economic forecasts to propel GBP/USD, Powell’s Speech eyed.

GBP/USD pays little heed to the mixed UK data as it remains sidelined around 1.2600 after a slew of British economics released heading into Wednesday’s London open. The reason could be linked to the market’s cautious mood ahead of the Federal Open Market Committee (FOMC) monetary policy meeting. Also, the lack of uniformity in data and doubt about the UK’s economic strength also prod the Pound Sterling traders of late.

That said, the UK’s Gross Domestic Product (GDP) for April matches 0.2% growth versus -0.3% prior while the Industrial Production slumps during the stated month. That said, the Industrial Production also disappoints and so do the Index of Services for three months to April.

Also read: UK GDP expands 0.2% MoM in April vs. 0.2% expected

Despite the latest disappointment from the mid-tier UK data, versus upbeat British GDP figures, the GBP/USD pair remains on the bull’s radar as Britain reported upbeat employment and inflation numbers previously. Also, the early signals from the Bank of England (BoE) have been in favor of more rate hikes.

Apart from that, downbeat prints of the US inflation numbers, as per the Consumer Price Index (CPI) and Core CPI figures for May, drowned the US Dollar and defend the Cable buyers.

While the initial reaction to the UK data dump fails to impress the Cable pair traders, mainly due to the pre-Fed anxiety, the quote appears to run out of hawkish bias and hence a surprise positive tone of Fed Chair Jerome Powell and/or upbeat economic forecasts, may recall the sellers.

Also read: Fed to pause, focus on July meeting

Technical analysis

An ascending resistance line from June 01, around 1.2615 by the press time, precedes the monthly high of near 1.2625, also comprising the peak of Doji candlestick marked on four-hour chart the previous day, to limit the GBP/USD pair’s upside.

However, the bears need validation from the 61.8% Fibonacci retracement level of its May month fall, around 1.2535 to retake control even for intraday.