- Republican candidate Donald Trump won the US presidential election.
- The Bank of England cut interest rates by 25 basis points as expected.
- Next week, the US will release data on consumer and wholesale inflation.
The weekly GBP/USD forecast points south amid falling BoE rate cut expectations and a stronger dollar following Trump’s win.
GBP/USD Ups and Downs
After a volatile week, the pound ended on a bearish candle as market participants absorbed the US election results. After weeks of uncertainty, Republican candidate Donald Trump won the election. The win was bullish for the dollar on expectations of higher tariffs and tax cuts during a Trump presidency.
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Meanwhile, the Bank of England cut interest rates by 25 basis points as expected. However, the pound strengthened as policymakers noted that the new budget was likely to raise inflation more than previously expected. As a result, traders have reduced their expected rate cuts in 2025 from four to three or two.
Next week’s key events for GBP/USD
Next week, the UK will release key employment data that shapes the outlook for a Bank of England rate cut. Economists already do not expect another BoE rate cut this year. Strong employment data is likely to push back the timing of the next rate cut.
At the same time, traders will focus on manufacturing output and gross domestic product data which will show the state of the UK economy. Recent data showed better-than-expected economic performance, dampening expectations for a rate cut.
Meanwhile, the US will release data on consumer and wholesale inflation that will determine the Fed’s future policy moves. If inflation is higher than forecast, the US central bank may be hesitant to cut in December. On the other hand, rate cut expectations will rise to cooler-than-expected numbers.
GBP/USD Weekly Technical Forecast: Bears target support at 1.2701
From the technical side, GBP/USD the price fell further to make a new low below the key psychological level of 1.3000. At the same time, the price is trading below the 22-SMA with the RSI in the bearish region below 50.
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After the bulls paused at the resistance at 1.3400, bearish momentum picked up, causing the price to fall below its support trendline and 22-SMA. So, control shifted from the bulls to the bears and stayed that way. At some point, the bulls challenged the SMA and 1.3000, but were not strong enough to take control. Consequently, GBP/USD could reach 1.2701 in the coming week.
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