- The US dollar remained fragile on Friday following Wednesday’s FOMC policy meeting.
- Data on Thursday showed that US jobless claims fell significantly.
- The Bank of England kept interest rates unchanged on Thursday.
The GBP/USD outlook shows solid bullish momentum following a major Fed rate cut and Bank of England break. The Fed’s massive rate cut weighed on the dollar, which fell against most majors. Meanwhile, the Bank of England kept interest rates on hold after cutting at the last meeting, boosting the pound.
–Are you interested in learning more about forex earnings? Check out our detailed guide-
The US dollar remained fragile on Friday after Wednesday’s FOMC policy meeting, which resulted in a 50 basis point rate cut. Economists had forecast a smaller rate cut of 25 bps. Meanwhile, traders were pricing in a 65% chance of a major decline. Still, it came as a surprise to some, putting pressure on the dollar.
The Fed has cut borrowing costs significantly despite signs that the economy is stable. According to Powell, the cuts were meant to keep the unemployment rate low. At the same time, it revealed a belief that high rates had finally tamed inflation. Still, there were fears that the rate cut was a sign of a bleak future for the US economy.
Meanwhile, data on Thursday revealed that US jobless claims fell sharply, pointing to tough conditions in the labor market. more upbeat data would increase the likelihood of a soft landing for the Fed.
On the other hand, the Bank of England kept interest rates unchanged on Thursday, as expected. Inflation in the UK is down significantly. However, the central bank is focused on services inflation which has been above estimates.
GBP/USD key events today
There will be no key economic reports from the UK or US today. Therefore, the pair could consolidate after recent gains.
GBP/USD Technical Outlook: Bulls struggle to hold above 1.3300
On the technical side, the GBP/USD price has reached the key resistance level of 1.3301. Although the bias is bullish and the price has risen, it could soon pull back to retest the 30-SMA.
–Are you interested in learning more about MT5 brokers? Check out our detailed guide-
The recent rally has pushed the price well above the SMA. At the same time, the RSI rose to trade near the overbought region. However, it made a bearish divergence with the price, which indicates weaker bullish momentum. If this divergence plays out, the price could soon fall. However, the bullish trend will continue if it stays 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.
