- Dollars cheered Trump’s pick for US Treasury Secretary.
- Market participants await the minutes of the FOMC meeting.
- Data on Friday revealed a stronger-than-expected slowdown in the UK economy.
The GBP/USD forecast suggests further dollar strength following Trump’s selection of Scott Bassent as the next US Treasury Secretary. Meanwhile, poor economic data left the pound fragile after hitting a six-month low on Friday.
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The dollar regained strength on Monday as bulls cheered Trump’s pick for US Treasury secretary. After Trump’s victory, Scott made remarks supporting a stronger dollar and proposed import tariffs. Therefore, traders believe it will be bullish for the dollar.
Meanwhile, market participants are waiting for more clues about the Fed’s future moves. On Tuesday, the US will release the minutes of the FOMC meeting, which could shed more light on the December meeting. The meeting came shortly after Trump won the election and changed the outlook for the US economy.
Accordingly, policymakers may have taken a more cautious tone, leading to a decline in Fed rate cut expectations. Currently, markets are predicting a 52% chance of a price cut in December. Hawkish minutes could reduce this probability below 50%, further boosting the dollar.
Meanwhile, the pound was weak after data on Friday revealed a bigger-than-expected slowdown in Britain’s economy. Notably, retail sales fell 0.7%, which was more than the expected 0.3% decline, reflecting weak consumer spending.
Meanwhile, PMI data showed an unexpected decline in business activity in the manufacturing and service sectors. Manufacturing PMI came in at 48.6, compared to estimates of 50.0. The services PMI was 50.0, below the forecast of 51.9. Poor economic data could pressure the Bank of England to cut interest rates.
GBP/USD key events today
Market participants are not expecting any key reports from the UK or US today. Therefore, they will continue to absorb political events in the US.
GBP/USD Technical Forecast: Bearish momentum builds after retest of 30-SMA
From the technical side, GBP/USD price is falling after retesting the 30-SMA resistance. At the same time, the RSI is falling well below the 50 mark, indicating stronger bearish momentum. Initially, the downtrend stalled at the 1.2500 support level, where the RSI made a bullish divergence.
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The price rose as it revisited the resistance at 1.2600 and the SMA. After that, the bears regained control with a solid candle. Given the strong bearish bias, the price may soon retest the 1.2500 support level and possibly break below.
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