GBP/USD Price Analysis – March 25, 2024
Daily Price Outlook
The GBP/USD currency pair managed to stop its previous bearish rally and gained some bullish traction around above the 1.2600 level. However, this upward trend can be attributed to several factors including the rising speculation that the Federal Reserve (Fed) would start cutting interest rates as early as June. This speculation has undermined the strength of the US dollar, contributing the GBP/USD currency pair gains. On the other hand, the UK Retail Sales data beating expectations suggests resilience in consumer spending, buoying confidence in the British pound and positively impacting the GBP/USD pair.
Fed Rate Cut Speculation and Its Impact on GBP/USD Pair
On the US front, Federal Reserve Chairman Jerome Powell's remarks about potential interest rate cuts have excited investors. However, the lowering rates could stimulate borrowing and spending, providing a boost to the economy, which impacts the GBP/USD pair.
Investors are closely monitoring indicators such as economic growth to anticipate potential rate cuts. Powell's comments indicate the Fed's readiness to support the economy as needed. This has investors eagerly awaiting further clues on timing and magnitude of rate adjustments, influencing the GBP/USD pair's performance.
According to market indicators like CME Group's FedWatch tool, there's a high chance the Fed will lower interest rates during the June meeting. This expectation has put pressure on the US dollar, making it weaker compared to other currencies like the British pound. As a result, the GBP/USD pair is likely to continue moving upward.
Positive UK Retail Sales Data Bolsters GBP/USD Pair
Another factor impacting the GBP/USD pair's performance is the UK Retail Sales data, which defied expectations by remaining flat in February. This figure was better than the estimated decline of 0.3%, signaling resilience in consumer spending despite economic challenges.
It is worth noting that the Office for National Statistics reported the positive outcome, which provided a boost to market sentiment regarding the UK economy. Given that the UK recently experienced a technical recession, with two consecutive quarters of economic contraction in the second half of the previous year, any positive economic data is welcomed by investors.
Therefore, the stronger-than-expected Retail Sales figures suggest that consumer confidence and spending may be more robust than previously anticipated. This positive sentiment surrounding the UK economy has contributed to the GBP's strength against the USD, further supporting the upward trend of the GBP/USD pair.
Anticipated Economic Releases and Central Bank Speeches Influencing GBP/USD Pair
Looking ahead, market participants are awaiting key economic releases that could provide further direction for the GBP/USD pair. However, the focus will be on the release of Gross Domestic Product (GDP) data from both the UK and the US, offering insights into the respective economies' performance.
Additionally, speeches from central bank officials, including the Fed's Raphael Bostic and the Bank of England's Catherine Mann, will be closely monitored for any hints regarding monetary policy decisions.
GBP/USD - Technical Analysis
The GBP/USD currency pair saw a slight uptick on March 25, closing at 1.26051, marking a 0.04% increase from the previous session. This modest gain reflects a cautious optimism in the market, with the pair navigating close to the pivot point of 1.2598. This level is pivotal for determining the pair's short-term direction, signaling potential shifts in market sentiment and investor behavior.
Key resistance and support levels outline the immediate landscape for GBP/USD. Resistance is encountered first at 1.2675, with subsequent barriers at 1.2732 and 1.2802, each representing potential targets for bullish movements. Conversely, support levels are clearly defined at 1.2542, 1.2501, and 1.2454, offering a safety net against downward pressures. These thresholds are crucial for traders to gauge the pair's resilience or vulnerability to market fluctuations.
Technical indicators provide further insight into the pair's dynamics. The Relative Strength Index (RSI) stands at 34, indicating a lean towards oversold conditions, which could suggest an impending reversal if the pair manages to garner bullish momentum. Additionally, the 50-Day Exponential Moving Average (EMA) at 1.2725 sits above current levels, underscoring a potential area of resistance but also highlighting the upward potential if the GBP/USD manages to break through the immediate ceiling.
Considering the technical outlook, adopting a strategic approach would involve setting a Buy Limit at 1.25953, with a Take Profit target at 1.26748 to capitalize on anticipated upward moves. A Stop Loss at 1.25432 is advisable to mitigate potential losses, providing a balanced risk-reward ratio. This tactical positioning reflects a readiness to exploit the GBP/USD pair's potential shifts, rooted in careful analysis of its technical landscape.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD edged up to 1.26051, hovering around a critical pivot point at 1.2598, indicating a cautious market sentiment.
- Resistance and support levels delineate potential upward and downward pathways, with an immediate resistance at 1.2675.
- Technical indicators suggest an oversold condition, offering a buying opportunity with a strategic entry point at 1.25953.
The GBP/USD currency pair saw a slight uptick on March 25, closing at 1.26051, marking a 0.04% increase from the previous session. This modest gain reflects a cautious optimism in the market, with the pair navigating close to the pivot point of 1.2598. This level is pivotal for determining the pair's short-term direction, signaling potential shifts in market sentiment and investor behavior.
Key resistance and support levels outline the immediate landscape for GBP/USD. Resistance is encountered first at 1.2675, with subsequent barriers at 1.2732 and 1.2802, each representing potential targets for bullish movements. Conversely, support levels are clearly defined at 1.2542, 1.2501, and 1.2454, offering a safety net against downward pressures. These thresholds are crucial for traders to gauge the pair's resilience or vulnerability to market fluctuations.
Technical indicators provide further insight into the pair's dynamics. The Relative Strength Index (RSI) stands at 34, indicating a lean towards oversold conditions, which could suggest an impending reversal if the pair manages to garner bullish momentum. Additionally, the 50-Day Exponential Moving Average (EMA) at 1.2725 sits above current levels, underscoring a potential area of resistance but also highlighting the upward potential if the GBP/USD manages to break through the immediate ceiling.
Considering the technical outlook, adopting a strategic approach would involve setting a Buy Limit at 1.25953, with a Take Profit target at 1.26748 to capitalize on anticipated upward moves. A Stop Loss at 1.25432 is advisable to mitigate potential losses, providing a balanced risk-reward ratio. This tactical positioning reflects a readiness to exploit the GBP/USD pair's potential shifts, rooted in careful analysis of its technical landscape.
GBP/USD - Trade Ideas
Entry Price – Buy Limit 1.25953
Take Profit – 1.26748
Stop Loss – 1.25432
Risk to Reward – 1: 1.25
Profit & Loss Per Standard Lot = +$795/ -$521
Profit & Loss Per Mini Lot = +$79/ -$52
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- The GBP/USD slight decline to 1.27197 reflects a tight market, eyeing critical technical levels.
- Technical indicators suggest a bearish tilt with a strategy to sell below 1.27394, eyeing 1.26677.
- RSI at 42 and EMA trends underscore the nuanced market sentiment, cautioning traders.
The GBP/USD pair showed minimal movement today, marking a slight decrease of 0.01% to settle at 1.27197. This subdued activity comes amidst a backdrop of critical technical levels that traders are keenly watching. The pivot point for today stands at 1.26677, indicating a pivotal juncture for future price movements. Resistance levels are clearly defined at 1.27600, 1.28077, and 1.28593, suggesting areas where upward momentum may face challenges. Conversely, the currency pair finds immediate support at 1.26721, with additional safety nets at 1.26416 and 1.26119, which could arrest further declines.
Technical indicators reveal a nuanced picture: the Relative Strength Index (RSI) stands at 42, pointing to a potential undervaluation that could entice buyers. Meanwhile, the 50-Day Exponential Moving Average (EMA) at 1.27432 hovers above the current price, suggesting a slight bearish sentiment in the near term.
Given these observations, the overall trend appears tilted towards bearish, with a recommended strategy to sell below 1.27394, targeting a take profit level at the pivot point of 1.26677, and setting a stop loss at 1.27752. This approach underscores a cautious yet strategic positioning amidst the pair's current technical landscape.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.27394
Take Profit – 1.26677
Stop Loss – 1.27752
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$717/ -$358
Profit & Loss Per Mini Lot = +$71/ -$35
GBP/USD Price Analysis – March 20, 2024
Daily Price Outlook
The GBP/USD currency pair has been trading on a bearish note and failed to stop its previous five-day losing streak. It is currently trading near 1.2720, as the US dollar continue to gain traction in the wake of expectations that the Fed will maintain its benchmark interest rate steady at its March meeting. Fed Chairman Jerome Powell has emphasized the need for more evidence that inflation is on a sustainable path toward its 2% target before considering lowering interest rates. As a result, lower expectations for a rate cut may lift the US dollar and kept the GBP/USD pair under pressure.
Moving ahead, Investors are closely monitoring two key events that could influence the direction of the GBP/USD pair, the UK February Consumer Price Index (CPI) inflation data and the Federal Reserve (Fed) interest rate decision.
Impact of Robust US Consumer and Producer Inflation Figures on GBP/USD Pair
On the US front, the previously released strong consumer and producer inflation figures in the United States fueled speculations that the Federal Reserve would adhere to its higher-for-longer interest rates narrative. This expectation has bolstered confidence in the US dollar and contributed to the downward pressure on the GBP/USD pair. The Fed's cautious approach to monetary policy, aimed at controlling inflationary pressures, has prompted investors to favor the US dollar over the British pound.
Therefore, the Fed plans to keep interest rates high until inflation stays consistently at or above its target, while the Bank of England aims to balance inflation control with supporting economic growth. This difference in approach between the two banks is putting pressure on the GBP/USD pair.
UK CPI Inflation Report and Its Impact on GBP/USD Pair
On the UK front, the UK CPI inflation report for February is expected to provide insights into the Bank of England's (BoE) monetary policy stance. The headline CPI is projected to rise by 3.6% month-on-month, slightly lower than the 4.0% increase recorded in January. Meanwhile, the Core CPI figure is forecasted to decline to 4.6% year-on-year in February from a 5.1% rise in January.
Hence, the stronger-than-expected CPI inflation report could convince the BoE to maintain its higher interest rates for a longer period, thereby supporting the pound against the US dollar. But if inflation eases, the BoE might hint at cutting rates, which could weaken the pound against the dollar
Traders will closely monitor the UK CPI inflation report ahead of the Fed interest rate decision. Following these events, attention will turn to Chairman Jerome Powell's press conference and economic projections, as well as the BoE interest rate decision on Thursday. These developments could provide clarity and direction to the GBP/USD pair in the coming days.
GBP/USD - Technical Analysis
The GBP/USD pair showed minimal movement today, marking a slight decrease of 0.01% to settle at 1.27197. This subdued activity comes amidst a backdrop of critical technical levels that traders are keenly watching. The pivot point for today stands at 1.26677, indicating a pivotal juncture for future price movements. Resistance levels are clearly defined at 1.27600, 1.28077, and 1.28593, suggesting areas where upward momentum may face challenges. Conversely, the currency pair finds immediate support at 1.26721, with additional safety nets at 1.26416 and 1.26119, which could arrest further declines.
Technical indicators reveal a nuanced picture: the Relative Strength Index (RSI) stands at 42, pointing to a potential undervaluation that could entice buyers. Meanwhile, the 50-Day Exponential Moving Average (EMA) at 1.27432 hovers above the current price, suggesting a slight bearish sentiment in the near term.
Given these observations, the overall trend appears tilted towards bearish, with a recommended strategy to sell below 1.27394, targeting a take profit level at the pivot point of 1.26677, and setting a stop loss at 1.27752. This approach underscores a cautious yet strategic positioning amidst the pair's current technical landscape.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- The GBP/USD's slight decline mirrors the market's current caution, with pivotal levels under scrutiny.
- Technical analysis suggests immediate resistance and support levels as key markers for potential movement.
- A strategic trading plan involves selling below 1.27565, with specified targets for profits and losses, balancing optimism with pragmatic risk management.
On March 18, the GBP/USD pair saw a modest decline of 0.02%, positioning itself at 1.27332. This minor adjustment reflects the broader context of forex market fluctuations, where currency values are highly sensitive to geopolitical and economic news. For the British pound against the dollar, this particular day's trading activity underscores a cautious sentiment among investors, awaiting clearer signals from market drivers.
The GBP/USD is navigating through critical technical levels. With a pivot point at 1.2746, the currency faces immediate resistance at 1.2782, followed by higher barriers at 1.2825 and 1.2861. On the flip side, support levels are established at 1.2711, 1.2682, and 1.2648, marking thresholds where the pair might find some footing if the selling pressure intensifies.
The Relative Strength Index (RSI) at 36 suggests the pair is nearing the oversold territory, hinting at a potential upward correction if the sentiment shifts. However, the 50-Day Exponential Moving Average (EMA) at 1.2781 hovers near the first resistance level, indicating that the pound's path to recovery might not be smooth.
The trading strategy, considering these technical indicators, involves initiating a sell position below 1.27565, aiming for a take profit at 1.26927, and setting a stop loss at 1.27888, reflecting a tactful approach to navigating the GBP/USD's nuanced technical landscape.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.27565
Take Profit – 1.26927
Stop Loss – 1.27888
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$638/ -$323
Profit & Loss Per Mini Lot = +$63/ -$32
GBP/USD Price Analysis – March 18, 2024
Daily Price Outlook
The GBP/USD currency pair has been losing momentum and failed to stop its losing streak. It is currently trading at the 1.2730 level. However, the reason for its downward trend can be attributed to the bullish US dollar, which has been gaining traction in the wake of a hawkish Fed outlook. This outlook was anticipated to maintain heightened interest rates amidst recent inflationary pressures.
Furthermore, the rise in Consumer Inflation Expectations, along with a possible BoE rate cut, suggests weakness for the GBP currency, leading to downward pressure on the GBP/USD pair. In contrast, the strong increase in the Rightmove House Price Index could help limit losses for the GBP currency by indicating resilience in the UK housing market, potentially bolstering investor confidence.
US Economic Data and Interest Rate Speculation
On the US front, the US Dollar rose due to higher US Treasury yields, driven by expectations that the Federal Reserve would keep interest rates high to combat inflation. The recent strong inflation data suggested that policymakers might raise interest rates to manage inflation, indicating a more aggressive stance towards controlling rising prices. Hence, the indication of potential interest rate hikes in response to strong inflation data typically boosts the US dollar as it signals a more robust approach to controlling inflation.
At the time of writing, the likelihood of a rate cut in March is minimal, but it rises for June and July. These developments suggest uncertainty regarding the future direction of US interest rates, potentially influencing the value of the US dollar in international markets.
On the data front, the US Michigan Consumer Sentiment Index for March fell unexpectedly to 76.5, contrary to forecasts for stability. This suggests a potential decrease in consumer confidence. However, Industrial Production in February showed a slight increase of 0.1%, surpassing expectations, indicating a modest recovery in manufacturing activity after a previous decline. Therefore, the unexpected decrease in the US Michigan Consumer Sentiment Index may negatively impact the US dollar due to potential lower consumer confidence. However, the slight increase in Industrial Production could provide some support.
UK Economic Data and Market Speculation
On the UK front, Consumer Inflation Expectations, released by the Bank of England (BoE), rose to 3.0% but fell from the previous 3.3%. This led to speculation in the markets that the BoE might cut interest rates in June, potentially undermining the GBP currency and pushing the GBP/USD pair lower.
On the data front, the Rightmove House Price Index for March showed significant increases, both monthly and annually, indicating robust activity in the UK housing market. Thus, the significant increases in the Rightmove House Price Index for March suggest positive sentiment for the UK housing market, potentially bolstering investor confidence and supporting the GBP/USD pair. Traders are now eyeing upcoming UK market indicators such as the Consumer Price Index, Producer Price Index, and Retail Price Index for further insights into economic trends.
GBP/USD - Technical Analysis
On March 18, the GBP/USD pair saw a modest decline of 0.02%, positioning itself at 1.27332. This minor adjustment reflects the broader context of forex market fluctuations, where currency values are highly sensitive to geopolitical and economic news. For the British pound against the dollar, this particular day's trading activity underscores a cautious sentiment among investors, awaiting clearer signals from market drivers.
The GBP/USD is navigating through critical technical levels. With a pivot point at 1.2746, the currency faces immediate resistance at 1.2782, followed by higher barriers at 1.2825 and 1.2861. On the flip side, support levels are established at 1.2711, 1.2682, and 1.2648, marking thresholds where the pair might find some footing if the selling pressure intensifies.
The Relative Strength Index (RSI) at 36 suggests the pair is nearing the oversold territory, hinting at a potential upward correction if the sentiment shifts. However, the 50-Day Exponential Moving Average (EMA) at 1.2781 hovers near the first resistance level, indicating that the pound's path to recovery might not be smooth.
The trading strategy, considering these technical indicators, involves initiating a sell position below 1.27565, aiming for a take profit at 1.26927, and setting a stop loss at 1.27888, reflecting a tactful approach to navigating the GBP/USD's nuanced technical landscape.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Minimal movement in GBP/USD signals a wait-and-see approach among traders.
- Key resistance and support levels define the short-term trading range.
- Technical indicators suggest a balanced market with potential for a bullish reversal.
The GBP/USD pair experienced a nominal decrease of 0.01%, landing at 1.27795, indicating a market teetering on the brink of directional bias. This slight movement reflects the broader market's ongoing assessment of economic data releases and geopolitical developments, impacting the Sterling against the Dollar.
The currency pair hovers just below its pivot point at 1.2781, suggesting that it is at a critical juncture. Resistance levels at 1.2824, 1.2857, and 1.2893 delineate the potential challenges ahead for bullish momentum. Conversely, immediate support is established at 1.2747, with further cushions at 1.2713 and 1.2672, marking essential levels that could influence a bearish turn if the pair dips below these markers.
The Relative Strength Index (RSI) at 47 points towards a market equilibrium, with a slight inclination towards selling pressure. Meanwhile, the 50-day Exponential Moving Average (EMA) at 1.2760 supports a cautious bullish outlook, suggesting a potential for upside movement if the pair can consolidate above this average.
Conclusion: The GBP/USD's current positioning indicates a neutral to slightly bearish trend, with an opportunity for reversal should it maintain above 1.27526. An advisable strategy would be to enter a buy position above this threshold, targeting 1.28055 for profit-taking, while placing a stop loss at 1.27207 to mitigate potential losses.
GBP/USD - Trade Ideas
Entry Price – Buy Above 1.27526
Take Profit – 1.28055
Stop Loss – 1.27207
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$529/ -$31
Profit & Loss Per Mini Lot = +$52/ -$31
GBP/USD Price Analysis – March 13, 2024
Daily Price Outlook
The GBP/USD currency pair maintained its previous day's winning streak, hitting an intraday high of $1.2800 mark. The upward movement was supported by delayed BoE rate cut bets, underpinning the GBP and lending support to the GBP/USD pair. Furthermore, the bearish US dollar, pressured by increasing bets that the Federal Reserve (Fed) will begin cutting interest rates at its June policy meeting, was seen as another key factor that kept the GBP/USD pair higher.
Impact of BoE Rate Expectations on GBP/USD Pair and Market Sentiment
On the UK front, the Bank of England (BoE) is expected to maintain higher interest rates for a longer period. This anticipation provided additional support to the GBP/USD currency pair, which had already been bolstered by bets against a BoE rate cut. Essentially, investors were betting that the BoE would delay any potential rate cuts, which strengthened the GBP against the US dollar.
Hence, the expectations of prolonged higher interest rates from the Bank of England (BoE) create a positive outlook for the GBP, as it signifies confidence in the UK economy, attracting foreign investment and strengthening the currency.
Impact of Fed Expectations on GBP/USD Pair and Market Sentiment
Despite reports of higher consumer inflation, the increasing bets that the Federal Reserve (Fed) will begin cutting interest rates as early as June are putting pressure on the US dollar. Additionally, a generally positive sentiment in the market is also weighing on the US dollar's strength.
On the US front, the broad-based US Dollar remained bearish and continuously lost ground despite the warmer US CPI report. On the data front, the latest report on the US Consumer Price Index (CPI) shows a 3.2% year-over-year increase in February, slightly higher than the expected 3.1%. This indicates a slight uptick in inflation. Additionally, the annual Core CPI, which excludes volatile food and energy prices, came in at 3.8%, slightly above the anticipated 3.7%. These numbers suggest a continued upward trend in inflation, which could impact consumers' purchasing power and the overall economy.
Despite the warmer US CPI report, the GBP/USD pair maintained its bullish momentum, supported by expectations of Fed interest rate cuts and a generally positive market sentiment, which weakened the US dollar. Moving ahead, traders are cautious ahead of the highly anticipated two-day FOMC monetary policy meeting starting next Tuesday.
GBP/USD - Technical Analysis
The GBP/USD pair experienced a nominal decrease of 0.01%, landing at 1.27795, indicating a market teetering on the brink of directional bias. This slight movement reflects the broader market's ongoing assessment of economic data releases and geopolitical developments, impacting the Sterling against the Dollar.
The currency pair hovers just below its pivot point at 1.2781, suggesting that it is at a critical juncture. Resistance levels at 1.2824, 1.2857, and 1.2893 delineate the potential challenges ahead for bullish momentum. Conversely, immediate support is established at 1.2747, with further cushions at 1.2713 and 1.2672, marking essential levels that could influence a bearish turn if the pair dips below these markers.
The Relative Strength Index (RSI) at 47 points towards a market equilibrium, with a slight inclination towards selling pressure. Meanwhile, the 50-day Exponential Moving Average (EMA) at 1.2760 supports a cautious bullish outlook, suggesting a potential for upside movement if the pair can consolidate above this average.
Conclusion: The GBP/USD's current positioning indicates a neutral to slightly bearish trend, with an opportunity for reversal should it maintain above 1.27526. An advisable strategy would be to enter a buy position above this threshold, targeting 1.28055 for profit-taking, while placing a stop loss at 1.27207 to mitigate potential losses.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
The GBP/USD pair's subtle decline to 1.28512, marking a 0.03% decrease on March 11, reveals a cautious market sentiment. Analyzing the 4-hour chart, the currency pair's technical structure showcases a pivot point at 1.28308, which serves as a baseline for short-term directional biases. Resistance levels identified at 1.28950, 1.29903, and 1.30912 delineate potential ceilings that could cap upward movements, whereas support levels at 1.27654, 1.26955, and 1.25977 suggest areas where buying interest might re-emerge.
The Relative Strength Index (RSI) hovering around 70 signals that GBP/USD is approaching overbought territory, suggesting that a corrective pullback might be on the horizon. Meanwhile, the 50-Day Exponential Moving Average (EMA) at 1.26657 underscores a bullish undertone, having maintained a trajectory above this moving average.
Given these observations, the trading strategy recommends initiating a sell position below 1.28939, targeting a take-profit level at 1.27836, while employing a stop loss at 1.29503 to mitigate potential losses.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.28939
Take Profit – 1.27836
Stop Loss – 1.29503
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$1103/ -$564
Profit & Loss Per Mini Lot = +$110/ -$56
GBP/USD Price Analysis – March 11, 2024
Daily Price Outlook
The GBP/USD pair failed to halt its downward rally and still showed a bearish bias around the 1.2847 level. However, the reason for its downward trend can be attributed to the renewed strength of the US dollar, which recently dropped on the back of downbeat US unemployment data. Although it gained traction in the wake of upbeat US Nonfarm Payrolls data. Apart from this, the losses in the GBP/USD pair were further bolstered by the narrowing policy divergence between the Federal Reserve and the Bank of England, exerting downward pressure on the pound.
Investors are also awaiting employment data from the United Kingdom (UK), including the ILO Unemployment Rate (3M) and Employment Change figures, scheduled for release on Tuesday. Additionally, the Consumer Price Index data for February will also be in the spotlight.
Interest Rate Cut Speculation Pressures GBP/USD Amid Positive UK Economic Sentiment
On the UK front, investors are predicting that the Bank of England (BoE) might start cutting interest rates as early as May, with expectations of three more cuts throughout 2024. This news is driving a bearish tone for the GBP/USD pair as markets anticipate the Federal Reserve (Fed) to cut interest rates before the BoE, potentially narrowing the policy gap between the two central banks.
Federal Reserve Chair Jerome Powell recently hinted at potential rate cuts this year, dependent on inflation aligning with the Fed's 2% target. Therefore, the anticipation of interest rate cuts by the Bank of England, coupled with the possibility of earlier cuts by the Federal Reserve, is creating a bearish outlook for the GBP/USD pair, narrowing the policy gap between the two central banks.
In contrast to this, the positive sentiment from the UK's Spring Budget announcement, coupled with forecasted stronger economic growth, is generally positive for the GBP.
US Dollar Rebounds on Upbeat Nonfarm Payrolls Data
On the US front, the broad-based US dollar managed to stop its losing streak and regained its strength at the start of the week. The previous losses in the dollar were mainly driven by the rise in the US unemployment rate, leading to expectations that the Federal Reserve will lower interest rates in June. However, the release of upbeat US Nonfarm Payrolls data helped the US dollar to gain traction.
On the data front, the US economy added 275,000 new jobs in February, beating expectations, but January's figures were revised down. Wage growth was slightly lower than expected. The chance of a Fed rate cut in May increased to 30% after the report, but June is still expected to be the most likely time for any such action.
On the positive side, the US Nonfarm Payrolls in February rose by 275,000, surpassing January's 229,000 and beating the expected 200,000. However, US Average Hourly Earnings (YoY) grew by 4.3%, slightly below both the estimated and previous reading of 4.4%. Monthly, there was a 0.1% increase, lower than the anticipated 0.3% and the previous month's 0.5%.
Therefore, the US dollar rebounded after a losing streak, buoyed by better-than-expected Nonfarm Payrolls. However, concerns about a Fed rate cut persist, impacting GBP/USD with uncertainty and potential volatility.
GBP/USD - Technical Analysis
The GBP/USD pair's subtle decline to 1.28512, marking a 0.03% decrease on March 11, reveals a cautious market sentiment. Analyzing the 4-hour chart, the currency pair's technical structure showcases a pivot point at 1.28308, which serves as a baseline for short-term directional biases. Resistance levels identified at 1.28950, 1.29903, and 1.30912 delineate potential ceilings that could cap upward movements, whereas support levels at 1.27654, 1.26955, and 1.25977 suggest areas where buying interest might re-emerge.
The Relative Strength Index (RSI) hovering around 70 signals that GBP/USD is approaching overbought territory, suggesting that a corrective pullback might be on the horizon. Meanwhile, the 50-Day Exponential Moving Average (EMA) at 1.26657 underscores a bullish undertone, having maintained a trajectory above this moving average.
Given these observations, the trading strategy recommends initiating a sell position below 1.28939, targeting a take-profit level at 1.27836, while employing a stop loss at 1.29503 to mitigate potential losses.