- The dollar fell on Wednesday as investors absorbed the outcome of the Fed’s policy meeting.
- Powell argued that the Fed’s next move would be to cut rates.
- British manufacturing fell in April.
The GBP/USD outlook remains bullish as the pound is strong against a weakening dollar. Recent remarks by Fed Chairman Jerome Powell have increased the likelihood that the Bank of England will cut rates well before the Federal Reserve.
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The dollar fell on Wednesday as investors absorbed the outcome of the Fed’s policy meeting. The central bank kept rates on hold. However, policymakers were wary of the recent pause in the decline in US inflation. In particular, Powell said he was less confident that inflation would reach the 2% target. However, he argued that the Fed’s next move would be to cut rates.
Therefore, investors expecting a hawkish speech were disappointed. There was no indication that the Fed would move to raise interest rates. Still, the outlook for a rate cut remains unclear. Moreover, Powell confirmed that the central bank will keep rates high until inflation continues its downward trend. Investors still expect the first rate cut in September or December.
Meanwhile, data from the US revealed a more significant increase in private sector employment than expected, underscoring continued high demand in the labor market. However, another report showed that job vacancies fell more than expected. Meanwhile, there was also a mixed picture of manufacturing data. However, these reports had little impact on prices as investors focused on the FOMC meeting.
Meanwhile, data from the UK revealed an unexpected drop in UK house prices, pointing to a drop in property market activity. At the same time, British manufacturing fell in April, another sign that the recent economic recovery has stalled.
GBP/USD key events today
GBP/USD Technical Outlook: Price struggles to maintain uptrend amid market pressure
On the technical side, the GBP/USD price is struggling to maintain its uptrend. The price is just above the 30-SMA and the RSI is just above 50. However, the bulls face a solid barrier. The uptrend stalled near the solid resistance trend line and the key 1.2550 level.
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Only an impulsive move could push above this resistance zone. In that case, the price would rise to retest the key resistance level of 1.2701. On the other hand, if the resistance remains firm, the price will break below the 30-SMA and target the support level of 1.2301.
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