GBP/USD Price Analysis – Nov 27, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair edged higher and reached an intra-day high of 1.2620. This rise comes as the US Dollar loses some ground because US President-elect Donald Trump nominated Scott Bessent for Treasury Secretary.
The market hopes Bessent will help carry out Trump’s trade policies slowly and carefully to avoid a full trade war. On the other hand, the British Pound is being cautious due to worries about how Trump’s tariffs might impact the UK’s exports.
US Dollar Faces Pressure Amid Trade Policy Uncertainty and Fed Rate Cut Expectations
On the US front, the broad-based US dollar has been under pressure this week after President-elect Donald Trump nominated Scott Bessent, an experienced hedge fund manager, for Treasury Secretary.
Investors believe Bessent will help implement Trump’s trade policies carefully to avoid a major trade war. This uncertainty has caused the US Dollar Index (DXY), which tracks the dollar against six major currencies, to weaken.
On the other side, investors are closely watching the possibility of a rate cut in December. According to the CME FedWatch tool, the likelihood of the Fed reducing interest rates by 0.25% has increased to 65% from 56% last week.
This is mainly due to the release of the Federal Open Market Committee (FOMC) minutes on Tuesday, which showed that some officials are open to pausing rate cuts if inflation stays high, while others believe further cuts might be needed if economic conditions worsen.
Moving on, investors will focus on the US Personal Consumption Expenditure (PCE) data for October, set to be released at 15:00 GMT. Economists predict that the core PCE inflation – which excludes food and energy prices – will rise to 2.8% year-over-year, up from 2.7% in September, with a steady 0.3% monthly increase.
Therefore, the uncertainty around US trade policies and the potential rate cut by the Fed could weaken the US dollar, which may support a rise in the GBP/USD pair. If inflation data aligns with expectations, the Pound could strengthen further against the Dollar.
Pound Sterling Faces Uncertainty Amid US Tariff Concerns and BoE Rate Expectations
On the other hand, the Pound Sterling is showing uncertain price movement against other major currencies as concerns grow about the impact of US tariffs on the UK’s export sector. These worries are making traders wary, affecting the Pound’s performance.
In an interview with the Financial Times, Bank of England (BoE) Deputy Governor Clare Lombardelli spoke about the potential impact of US tariffs on the UK economy. She acknowledged that trade barriers could harm economic growth in the short, medium, and long term but refrained from making any specific predictions about how severe the effect might be.
This week, there are no significant UK economic updates. As a result, the British Pound’s movement will likely depend on market expectations regarding the BoE’s interest rate decision in December. Currently, traders expect the BoE to keep interest rates steady at 4.75% next month, waiting for more data before deciding on future actions.
Therefore, the uncertainty surrounding US tariffs and the Bank of England's cautious stance on interest rates may weigh on the British Pound. This could limit any significant upward movement for GBP/USD, as traders await further economic data and BoE's rate decision in December.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25792, up 0.09%, reflecting cautious optimism amid mixed technical signals. On the 4-hour chart, the pair remains above its 50 EMA at $1.25722, suggesting moderate support for current levels.
The pivot point at $1.26157 is a critical barrier; a sustained move above this level could target immediate resistance at $1.26476, followed by $1.26747.
On the downside, immediate support lies at $1.25363, with further levels at $1.25112 and $1.24874. A break below $1.25363 would likely shift momentum toward bearish territory, exposing the pair to declines toward $1.24874 or lower.
Technical indicators paint a neutral-to-slightly-bullish picture. The RSI stands at 52, indicating consolidation near the midpoint of the range. While not overbought, the pair lacks significant upward momentum, keeping price action restrained.
The outlook hinges on the pivot point at $1.26157. A breakout above this key level would affirm bullish sentiment and open the door for a move toward $1.26476 and beyond.
Conversely, failure to hold above the 50 EMA at $1.25722 or a decisive break below $1.25363 could prompt sellers to regain control, leading to short-term bearish pressure.
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