GBP/USD Price Forecast: UK Housing Prices a Sign of Future Pound Weakness?

GBPUSD FUNDAMENTAL BACKDROP

The British pound remains bid in early trade this Thursday against the greenback but the latest RICS house price balance data for May (see economic calendar below) shows surveyors conveying a fall in prices – although less than expected. Following on from yesterday Halifax report, the RICS release highlights the tight monetary policy environment. The rest of the trading should be relatively quiet with some short-term volatility expected around the US jobless claims release.

ECONOMIC CALENDAR

Bank of England (BoE) expectations (below) show roughly 100bps of additional interest rate hikes in 2023 which is comparatively high to other major central banks. This leaves room for a dovish repricing should UK economic data show signs of a continued economic slowdown (GDP, labor market, inflation etc.).

BANK OF ENGLAND INTEREST RATE PROBABILITIES

TECHNICAL ANALYSIS

GBP/USD DAILY CHART

Chart prepared by Warren Venketas, IG

Price action on the daily cable chart shows the pair approaching the apex point of a symmetrical triangle chart pattern. Pound bulls are now finding resistance at the 50-day MA (yellow) but the short-term directional bias remains uncertain as reflective by the Relative Strength Index (RSI) which is trading around the midpoint zone favoring neither bullish nor bearish momentum.