- Traders are still digesting last week’s events
- BoE Governor Andrew Bailey said the central bank could turn to aggressive cuts.
- The US NFP report revealed an unexpected 254,000 new jobs in September.
The GBP/USD forecast shows a period of consolidation after the recent drop to new lows. The pound remained weak after remarks from the BoE last week. On the other hand, the dollar paused, holding onto the gains made after the upbeat US NFP report.
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Market participants were calm on Wednesday as prices paused in a slow start to the week. Accordingly, traders continued to bet on last week’s events, which pressured the pound and boosted the dollar.
Last week, economic data and remarks from policymakers pointed to an aggressive BoE and a gradual Fed. Bank of England Governor Andrew Bailey said the central bank could turn to aggressive cuts depending on future inflation data.
Meanwhile, most US economic reports last week showed a resilient economy. The biggest catalyst came on Friday when the NFP report revealed an unexpected 254,000 new jobs in September. Moreover, the unemployment rate decreased to 4.1%. Consequently, market participants trimmed bets on a November rate cut, with futures suggesting a rate cut of 25 basis points. The dollar strengthened to a seven-week high, weighing on peers like the pound.
This week, the UK and US will release more economic data that will continue to shape the outlook for rate cuts. In particular, traders will be watching the UK GDP report on Friday, highlighting growth. Weaker-than-expected growth could put more pressure on the BoE to cut rates. Meanwhile, in the US, the FOMC minutes and the CPI report may contain clues about the Fed’s next policy moves.
GBP/USD key events today
GBP/USD Technical Forecast: Bears show exhaustion after sharp decline
On the technical side, the GBP/USD price is in a tight consolidation, slightly above the support level of 1.3051. Meanwhile, the bearish bias remains intact, with the price below the SMA and the RSI below 50. After a sharp decline, the price has stalled.
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However, the RSI is making higher highs, indicating exhaustion in the downtrend. If the bears have weakened, they may not be able to break the support at 1.3051. Moreover, the bulls could reverse the trend by breaking above the SMA. However, if the bears take a short break, the price could soon start to fall to lower lows.
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