GBP/USD resilient amid mixed US inflation data, UK economic growth

• US Producer Price Index (PPI) outpaces June, driving a temporary Greenback rally and GBP/USD dip.
• University of Michigan poll indicates optimism on inflation’s decline post-Fed’s 525 bps rate hike.
• UK’s economy outperforms forecasts, bolstering Bank of England’s rate hike stance amidst looming recession fears.

Late in the New York session, the Pound Sterling (GBP) continued to hold its ground against the US Dollar (USD) after UK’s economy grew more than expected, despite US elevated inflation on the producer side. Hence, the GBP/USD trades at 1.2697, gaining 0.16%.

Wall Street wavers as mixed US inflation data clashes with UK’s unexpected economic surge

Wall Street is set to finish the session with losses after the United States (US) inflation data posted mixed results. Consumers’ inflation climbed above the prior’s month but below estimates, sparking speculations on the Federal Reserve (Fed) ending its tightening cycle, but data on Friday changed investors’ minds.

The US Department of Labor showed the prices paid by producers, known as the Producer Price Index (PPI), exceeded June’s readings, spurring a Greenback rally; consequently, the GBP/USD weakened.

The University of Michigan Consumer Sentiment poll, revealed that US consumer sentiment slightly deteriorated. Still, Americans remained positive on inflation lowering after the US Federal Reserve (Fed) increased 525 bps its borrowing costs, with inflation expected to dive below 3% on a five-year horizon.

Across the Atlantic, UK’s economy surprisingly grew above estimates, justifying the Bank of England’s (BoE) need to raise rates amidst stubbornly high inflation. Nevertheless, next week’s inflation data can lend a lifeline to the BoE if it shows signs of slowing down as the UK’s economy is still at the brisk of a recession.

GBP/USD Price Analysis: Technical outlook

The GBP/USD breaking to a new weekly high, above 1.2800 but reversing its gains on soft US inflation data, has exacerbated GBP/USD’s pullback, extending beneath the 1.2700 figure. If  GBP/USD remains below the latter and achieves a daily close, that would cement Sterling’s (GBP) faith. That said, the GBP/USD first support would emerge at 1.2666, followed by the August 3 daily low of 1.2620, ahead of sliding towards 1.2500. Conversely, if GBP/USD’s buyers reclaim 1.2700, it would be cheered by buyers, which could remain hopeful of targeting 1.2800, ahead of challenging the July 27 daily high at 1.2995.