GBP/USD steady ahead of US consumer confidence and GDP data

The GBP/USD price is retreating today even after the recent positive economic data from the UK and the upcoming reopening of the UK economy. It is trading at 1.4127, which is 0.78% below last week’s high of 0.4233.

UK economy rebounding

The UK was one of the worst affected countries in Europe by the coronavirus pandemic. Yet the country has become one of the best performers this year because of the government’s vaccination efforts. The recent data show that the government has vaccinated more than 21 million people fully. More than 37 million people have received at least one dose of the coronavirus vaccine.

The results of this vaccination drive have started being seen in the recent economic data. For example, last week, data showed that the UK unemployment rate declined to 4.8% in March. This is a better reading than in other countries like the United States and Germany. The country’s inflation and GDP data were also better than expected.

Further, data published last week revealed that the UK retail sales also rose sharply in April, the first full month of initial reopening. Similarly, data by Markit showed that the manufacturing and services PMI rose sharply in May as the sectors rebounded.

UK companies have also started to report strong results of the reopening. For example, in a report today, Cineworld said that there was strong demand for movie tickets during the weekend. It expects the trend will continue in the upcoming weekends. This is notable since Cineworld is the biggest operator of movie theatres in the UK.

Analysts at ING believe that flash numbers will be positive into June when the country will move into the next phase of reopening. They noted:

“Unless concerns surrounding the India-originating Covid variant start to reverse the recent rise in consumer/business confidence, we expect just-shy of 7% growth this year, including 5% growth in the second quarter.”

This week, the GBP/USD will mostly be affected by activities in the US dollar since there will be no major economic data from the UK.

GBP/USD forecast

The daily chart shows that the GBP/USD price is hovering near the highest point this year. The pair has completed the cup part of the cup and handle pattern. It is also slightly above the 25-day and 50-day weighted moving averages (WMA). The Stochastic oscillator has also jumped to the overbought level. It is also above the ascending trendline that connects the lowest levels since September last year. Therefore, the pair may soon have a bullish breakout as bulls attempt to move above the YTD high of 1.4233.