- UK wage growth stagnated in the three months to September.
- Market participants will pay attention to BoE Governor Andrew Bailey’s speech.
- The upcoming US election is keeping market participants on edge.
GBP/USD price analysis shows bears regaining enthusiasm amid signs the UK labor market is cooling. Meanwhile, the dollar strengthened as traders priced in a more gradual easing cycle for the Fed. However, there was caution ahead of the US presidential election.
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Wage growth in the UK stagnated in the three months to September, and companies expect more cooling in wages in the coming year. In particular, wage growth remained stable at 4.0%. Cooling labor market conditions will put pressure on the Bank of England to reduce borrowing costs, which will weigh on the pound. Meanwhile, market participants will be paying attention to BoE Governor Andrew Bailey’s speech later in the day. Furthermore, the UK will release PMI data this week which could impact the outlook for a BoE rate cut.
Elsewhere, traders are more confident that the Federal Reserve will stick to a gradual pace of interest rate cuts. Recent employment and sales data showed strong demand in the US economy. Therefore, there is no longer any urgency to reduce borrowing costs. At the same time, inflation jumped in September, leading to a more cautious stance by most policy makers. Notably, some predicted just one more rate cut this year.
Investors will be watching the upcoming PMI numbers, which show the health of the economy. More upbeat reports could reduce the likelihood of a rate cut in November, boosting the dollar.
Meanwhile, the upcoming US election is keeping market participants on edge. The tight race increased uncertainty about the outcome, pushing traders to buy dollar safe havens.
GBP/USD key events today
GBP/USD technical price analysis: Bears target support at 1.2900
From the technical side, GBP/USD the price is on the verge of breaking below the support at 1.2960. Moreover, the price recently broke through this level to make a lower low. Bears are firmly in the lead, with price below the 30-SMA and RSI below 50.
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However, the price action shows that the downtrend has slowed. Bears are no longer making significant swings below the 30-SMA, indicating weakness. However, if the downtrend continues, GBP/USD will soon reach the 1.2900 level. The bias will change only when the price starts trading above the 30-SMA.
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