The Pound Sterling (GBP) gained against the US Dollar (USD) amid renewed speculation of a potential Federal Reserve rate cut in June, lifting GBP/USD to 1.2639. Mixed Fed commentary and weaker US housing data weigh on the USD.

Key Factors:

• Dovish Fed Outlook: Market bets on a June rate cut increase, fueling GBP gains.
• Weak US Data: A slight decline in New Home Sales and muted Chicago Fed National Activity Index fail to support the USD.
• UK Recession Fears: Expectations of a technical recession in the Q4 2023 GDP release put pressure on the GBP.
• BoE Comments: Dovish remarks by BoE Governor Bailey increase the likelihood of a rate cut.

Technical Outlook:

• Bullish Harami Emerges: The formation of a ‘bullish harami’ candlestick pattern suggests potential further upside.
• Key Resistance: A break above the 50-day moving average (DMA) at 1.2679 is needed to confirm the reversal pattern, opening the door toward 1.2700 and the March 21 high at 1.2803.
• Bearish Case: A slip below the 200-DMA at 1.2591 would negate the bullish pattern and signal potential further losses.