GBP/USD Price Analysis – Nov 11, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its early-day losing streak, remaining under pressure around the 1.2896 level and reaching an intraday low of 1.2888. However, the US dollar bullish rally was a key factor behind this bearish trend, along with uncertainty and cautious sentiment ahead of this week’s UK and US macroeconomic releases, which further weighed on the GBP/USD pair.
However, the Bank of England's hawkish stance provided some support for the GBP, limiting further losses in the GBP/USD pair. Moreover, the risk-on mood capped gains for the safe-haven US dollar, offering some support to GBP/USD. Despite these supportive factors, the strength of the US dollar dominated, putting pressure on the GBP/USD pair.
BoE's Hawkish Stance and Economic Data Awaited as GBP/USD Remains Cautious
On the GBP front, the Bank of England (BoE) has taken a hawkish stance, especially after warning that Chancellor Rachel Reeves’ expansive Autumn Budget could drive inflation higher. This cautious sentiment suggests the BoE may avoid cutting interest rates in 2025.
Meanwhile, the current positive market mood limits gains for the safe-haven US dollar, offering some support to the GBP/USD pair and encouraging caution before placing strong bearish trades.
Investors appear hesitant, likely staying on the sidelines as they await major economic data from both the UK and the US. However, the major UK data this week includes job market figures on Tuesday and preliminary Q3 GDP data on Friday.
Meanwhile, the US is set to release its Consumer Price Index (CPI) on Wednesday, followed by the Producer Price Index (PPI) on Thursday and Retail Sales data on Friday.
Therefore, the combination of the BoE's hawkish stance and key economic data releases from both the UK and the US creates uncertainty, limiting significant movement in the GBP/USD pair. Investors are likely to remain cautious, awaiting clearer direction.
US Dollar's Bullish Momentum Limits GBP/USD Gains Amid Inflation Concerns and Economic Data
On the US front, the broad-based US dollar maintained its bullish momentum, holding near recent highs amid expectations that President-elect Donald Trump’s policies could increase inflation. This anticipated inflation rise may limit the Federal Reserve's ability to cut interest rates aggressively.
Federal Reserve officials, including Minneapolis Fed President Neel Kashkari, highlighted the economy's resilience, noting that more evidence is needed to confirm inflation’s return to the 2% target.
Although some suggest Trump’s fiscal policies could lead to more spending and labor demand, potentially strengthening the dollar, Fed Chair Jerome Powell emphasized that the Fed will remain data-driven and not speculate on future policy changes.
Meanwhile, economic data continues to show a solid US economy. On the data front, the preliminary University of Michigan Consumer Sentiment Index rose to 73.0 in November, signaling consumer optimism, while weekly jobless claims slightly increased but stayed close to expectations.
Therefore, the US dollar's strength, driven by expectations of rising inflation and limited rate cuts, is putting downward pressure on the GBP/USD pair. Despite the Bank of England's hawkish stance, the USD's bullish trend limits any significant gains for GBP/USD.
GBP/USD – Technical Analysis
The British pound (GBP/USD) is trading slightly higher at $1.2909, marking a modest 0.05% gain on the day. The currency pair’s price action has remained confined within a tight range, with immediate technical levels providing both resistance and support.
The pivot point is positioned at $1.2925, offering a key reference for potential price fluctuations. GBP/USD faces immediate resistance at $1.2949, just above the 50-day Exponential Moving Average (EMA) at $1.2944. This EMA level serves as a significant resistance point, and a failure to breach it may keep the pound under pressure.
Further resistance is seen at $1.2974, with additional upside capped by the next key level at $1.3007. On the downside, immediate support lies at $1.2893. If bearish sentiment increases, the pair could test the next support at $1.2865, with a further drop potentially extending to $1.2834.
Technical indicators suggest a neutral to slightly bearish outlook. The Relative Strength Index (RSI) is at 41, indicating that there is still room for the pound to decline before reaching oversold levels. The 50 EMA at $1.2944 represents a critical threshold, and a close below this level would reinforce the bearish bias.
Traders may consider a potential short entry below $1.2944, targeting a take-profit level at $1.2928 and setting a stop-loss above the $1.2949 resistance
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