- The vote reveals that Trump will be the next president of the United States.
- Data on Friday revealed a poor performance in the US labor market.
- The Bank of England is likely to cut rates by 25 basis points on Thursday.
The GBP/USD forecast turned to the downside after news outlets announced that Republican candidate Donald Trump had won the election. Meanwhile, market participants braced for a rate cut at the Bank of England’s policy meeting.
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Polls in the US on Wednesday found Trump in the lead and likely to become the next president. After weeks of speculation, market participants are more confident that Trump’s policies will increase inflation. Because of this, the Fed may have difficulty ending its cycle of interest rate cuts.
After the election, market focus will return to the state of the US economy and the FOMC policy meeting. Data on Friday revealed a poor performance in the US labor market. The US economy added just 12,000 jobs in October, well below estimates of 106,000 additional jobs. However, the impact on the dollar was minimal as the unemployment rate remained stable. At the same time, experts noted that the slow job growth was due to the disruption caused by the hurricanes.
Still, the report could shape the tone during the FOMC’s policy meeting. Ahead of the data, policymakers took a more hawkish tone, with some expecting the central bank to pause in December. If this tone remains, the dollar will rise. On the other hand, if the Fed signals another rate cut this year, the dollar will collapse.
Meanwhile, the Bank of England is likely to cut rates by 25 basis points on Thursday. This outlook follows recent figures showing inflation at 1.7%, below the central bank’s targets. However, most economists believe this could be the last rate cut this year.
GBP/USD key events today
Market participants will continue to digest the US election results as there are no other high-impact reports.
GBP/USD Technical Forecast: Bulls relinquish control above 1.3000
From the technical side, GBP/USD the price fell after failing to sustain a move above the key psychological level of 1.3000. The bulls tried to take control. However, the sentiment suddenly changed when the price formed a bearish closing pattern.
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A break below the 22-SMA allowed the bears to retest the support level at 1.2850. If the bears maintain their enthusiasm and the RSI remains below 50, the price will make a new low below 1.2850, continuing the previous downtrend.
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