Pound Remains Defensive Amid Slowing UK Inflation.

Fundamental Analysis

* Dismal mood: The Pound Sterling has fell against the dollar and its peer as the major pair remains at risk due to slowing UK inflation and negative market sentiment. On U.S front, several Federal Reserve officials discussed the monetary policy outlook on Tuesday. Loretta Mester, President of the Cleveland Fed Bank, maintained her expectation of interest rate cuts within the year but ruled out the possibility of it happening at the next policy meeting in May. Mary Daly, President of the San Francisco Fed Bank, also foresees rate reductions this year but emphasized the need for further evidence of inflation cooling down before implementing them. Daly stated that three rate cuts in the year are a “very reasonable baseline,” although nothing is certain. Traders continue to raise their bets on BoE will cut interest rate before U.S Fed this year. On top of that, the dismal market mood and easing UK inflation also weigh on the currency.

Technical Analysis

* Technical Breakout: GBPUSD was traded lower following recent breakout below the previous support level 1.25850. MACD which illustrate diminishing bullish momentum suggest the pair to extend its losses towards the next level.

* Resistance and Targets: If the bearish momentum persists, there’s a strong likelihood that the price will fall towards the subsequent level 1.25350. However, if the price breaks back above 1.25900 level, it may signal a potential reversal for the pair and head towards 1.26450.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will now mostly eye on U.S data and also Fed. Speeches are scheduled from Fed officials Bowman, Goolsbee, Barr, Kugler, and Powell. Should any of these officials express dovish sentiments, it may exert downward pressure on the US dollar and provide support for the GBP/USD pair in the short term.

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Monitoring

Stay updated on U.S and U.K data, BoE updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.