Bullish view

 Bearish view

The GBP/USD exchange rate bounced back sharply after the strong UK flash composite PMI and a hawkish statement by Huw Pill, a senior Bank of England (BoE) official. The pair also rebounded because of the broader US dollar weakness. It rose to the crucial resistance level at 1.2450, higher than this week’s low of 1.2300. UK PMI data and hawkish BoE statementThe GBP/USD pair resumed its rebound as the US dollar index (DXY) and bond yields retreated. The US dollar index fell to $105.52 on Wednesday morning, down from this week’s high of over $106.3.Similarly, US bond yields continued falling, with the 10-year and 5-year Treasury yields falling to 4.57% and 4.60%, respectively. This price action happened as investors embraced a risk-on sentiment as evidenced by the recovery of US and UK equities. The closely-watched FTSE 100 index has roared to a record high.The pair also jumped after the flash manufacturing and services PMI numbers from the UK. According to S&P Global, the country’s manufacturing PMI retreated from 50.3 in March to 48.7 in April as woes in the industry continued.This decline was offset by a big increase of the services sector where the PMI figure rose from 53.1 to 54.9, which was higher than the median estimate of 53. As a result, the composite figure rose to 54.Meanwhile, Huw Pill, Bank of England’s chief economist warned that the bank should be wary of cutting too soon after inflation hits its 2% target. This statement came a few days after the deputy governor noted that inflation will drop to the target of 2.0% soon leading to a cut. Pill’s view means that the BoE may not be as dovish as most participants expect.There will be no important economic data on Wednesday. The only report to watch will be the US durable goods data, which will come a day before the country’s GDP data. GBP/USD technical analysisThe GBP/USD exchange rate formed a bullish engulfing pattern when it tumbled to a multi-month low of 1.2300. In price action analysis, this is one of the most popular reversal patterns in the market.It has bounced back and moved above the 23.6% Fibonacci Retracement level. It has also moved above the first resistance of the Woodie pivot point and is attempting to flip the 50-period Exponential Moving Average (EMA).The Relative Strength Index (RSI) has also pointed upwards. Therefore, the outlook for the pair is moderately bullish ahead of the US GDP and PCE inflation report. If this happens, the pair will likely rebound and retest the psychological point at 1.2533, its 38.2% retracement point.More By This Author:Corporate Bond ETFs HYG And JNK Suffer Outflows Amid Fed Jitters BTC/USD Forex Signal: Bitcoin Price Could Retest $70k After Halving5 U.S. Penny Stocks To Buy Now For Short-Term Gains