FX.co ★ Hot forecast for GBP/USD on June 14, 2023

The unexpected decrease in the UK unemployment rate from 3.9% to 3.8% instantly triggered a rise in the pound. This is not surprising, especially since it was expected to rise to 4.0%. However, strange things started to happen afterward. Inflation in the United States slowed down from 4.9% to 4.0%, with a forecast of 4.3%. In theory, this should have further strengthened the pound's upward momentum since such a significant decrease in inflation clearly indicates a shift in the Federal Reserve's policy direction. There is no doubt now that the U.S. central bank will start lowering interest rates before the end of this year. However, the market simply froze in place. It feels like everyone is in a state of paralysis. Most likely, the inflation data was so unexpected that investors did not immediately grasp what to expect from the Fed and decided not to take risks and wait a little longer.

Based on this, we can assume that today's industrial production data in the UK, the pace of decline of which is expected to slow from -2.0% to -1.6%, will not have any significant impact. The market will continue to wait not so much for the outcome of today's Federal Open Market Committee meeting but rather for Fed Chairman Jerome Powell's subsequent press conference. If Powell explicitly mentions the possibility of a future rate cut, the dollar will begin to get weaker.

The GBP/USD pair not only managed to recover from the losses at the beginning of the trading week but also set a new local high in the upward cycle. As a result, the quote rose above the 1.2600 level, indicating almost complete recovery in price relative to the May correction period.

On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, which points to the bullish sentiment.

On the same time frame, the Alligator's MAs are headed upwards, which corresponds to the current upward cycle.

Outlook

We can assume that if the current cycle persists in the market, we might witness a new high in the medium-term trend in the near future. However, such rapid appreciation of the British currency may signal technical overbought conditions, which could lead to a temporary pullback.

The complex indicator analysis unveiled that in the short-term, intraday, medium-term periods, indicators are providing an upward signal.