- The market’s focus is squarely on the prospect of rate cuts in the US and the UK.
- The UK economy is doing better than expected, boosting the pound.
- The US will release GDP and PCE data this week.
The GBP/USD forecast shows a slight dip in the bullish trend, with the pound close to a two-year high in the previous session. The rise to this peak came as markets bet on more rate cuts from the Fed than the Bank of England. Meanwhile, markets awaited US GDP and inflation data.
-Are you interested in learning more about the Live Forex Calendar? Click here for details –
Sterling weakened slightly on Wednesday after hitting a new high. The market’s focus is squarely on the prospect of rate cuts in the US and the UK. According to bets, the Fed could implement a cut of 100 basis points this year. Meanwhile, the Bank of England could cut by 40 basis points after cutting 25 basis points in August. At the same time, the UK economy is doing better than expected, boosting the pound.
On Friday, the BoE governor and the Fed chairman talked about cutting rates. Powell indicated that it is time for the Fed to start reducing borrowing costs as the labor market has shown weakness. As a result, bets on a September cut rose, sinking the dollar.
On the other hand, Andrew Bailey warned against rushing to cut rates. He noted that it is too early to know whether the fight to curb inflation is over. Consequently, expectations of a rate cut fell and the pound rose.
However, the incoming data could change the outlook for UK and US politics. The US will release GDP and PCE data this week, which could change expectations.
GBP/USD key events today
Trading is likely to remain this way as neither Britain nor the US will release major reports.
GBP/USD Technical Forecast: Bears take over as bulls show exhaustion
On the technical side, the GBP/USD price is pulling back after making a higher high. However, the bias remains bullish, with price above the 30-SMA and RSI above 50. Bulls have maintained a steep price trend above the SMA. It recently broke the resistance level at 1.3150 and headed towards the critical level of 1.3301. However, the road to the 1.3150 level was difficult.
-Are you interested in learning about forex signals? Click here for details –
The RSI showed a slight divergence, indicating exhaustion. As a result, the bears took over. However, the bullish trend will continue if the price remains above the SMA.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
