GBP/USD Price Analysis – Nov 04, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend and remained well-bid around the 1.2961 level and reaching an intraday high of 1.2999. However, the upward trend can be attributed to the US Dollar's strong decline ahead of the upcoming presidential election on Tuesday.
As a result, the Pound Sterling is gaining strength against the Dollar and other major currencies. Investors are also focused on the Bank of England’s monetary policy decision expected on Thursday, which could further impact the cable pair performance.
US Dollar Weakness and Its Impact on GBP/USD Exchange Rate
On the US front, the broad-based US dollar failed to sustain its bullish trend and turned bearish on Monday as the US Dollar Index (DXY) dropped to around 103.60, its lowest level in almost two weeks.
However, this decline was triggered by a recent poll from the Des Moines Register/Mediacom Iowa Poll, which showed Democratic candidate Kamala Harris gaining three points over former President Donald Trump in Iowa. Many national polls indicate a close race between the two candidates, creating uncertainty in the market.
Besides the election, investors are also looking to the Federal Reserve’s (Fed) policy announcement on Thursday. The Fed is expected to cut interest rates again, but this time by a smaller amount of 25 basis points, following a larger cut of 50 basis points in September. Investors will be particularly attentive to the Fed’s comments about future rate decisions, especially for the December meeting.
Therefore, the bearish trend of the US dollar could strengthen the GBP/USD pair as the Pound gains against a weakening Greenback. Meanwhile, uncertainty surrounding the election and potential Fed rate cuts may further support the Pound’s upward momentum against the Dollar.
Impact of Bank of England's Monetary Policy on GBP/USD Pair
On the GBP front, the upticks in the GBP/USD pair could be further boosted by the Bank of England's (BoE) monetary policy decision expected on Thursday. However, the BoE is anticipated to cut interest rates by 25 basis points, bringing them down to 4.75%.
Notably, Monetary Policy Committee (MPC) members are mostly in favor of a rate cut, with seven expected to support it, while two, including external member Catherine Mann, prefer maintaining rates at 5%.
Investors will closely watch BoE Governor Andrew Bailey’s press conference following the policy decision for insights into future actions, especially for December.
Moreover, UK Chancellor of the Exchequer recently announced £40 billion in new taxes, the highest since 1993, along with various investment projects aimed at boosting public spending. The Office for Business Responsibility (OBR) has also raised current-year inflation targets to 2.5% from the previous 2.2%.
Therefore, the anticipated rate cut by the Bank of England could strengthen the GBP/USD pair, as a lower interest rate may encourage investment in the Pound. However, the uncertainty around inflation targets and government policies could also create volatility in the exchange rate.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.29868, up 0.56% for the day, as it hovers around a key pivot level at $1.29954. This pivot point will be critical in determining the pair’s next move. Immediate resistance is positioned at $1.30108, followed by further resistance at $1.30262 and a higher target at $1.30431.
A break above these levels could indicate renewed bullish momentum, particularly if GBP/USD sustains above the 50-day Exponential Moving Average (EMA) of $1.29315. With the Relative Strength Index (RSI) reading at 64, the pair is close to overbought territory, signaling that the upside may be limited unless there’s a decisive move past the resistance zone.
On the downside, immediate support lies at $1.29674, with additional layers at $1.29473 and $1.29274. Should the pair drop below $1.29674, selling pressure could increase, pushing GBP/USD toward the 50 EMA, which acts as a significant support barrier.
Market sentiment is closely tied to ongoing dollar strength and investor sentiment around the Bank of England’s interest rate outlook, which could influence GBP demand.
For traders, a breach below the pivot at $1.29954 could trigger selling interest, targeting $1.29531. However, a sustained push above $1.30108 would shift the outlook to bullish, with $1.30431 as an upper target in the short term.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot Sensitivity: GBP/USD’s pivot at $1.29954 is critical; a break below may signal bearish momentum.
- Overbought Warning: RSI at 64 suggests limited upside as the pair nears overbought territory.
- Resistance Challenge: Key resistance levels at $1.30108 and above could determine further bullish potential.
The GBP/USD pair is trading at $1.29868, up 0.56% for the day, as it hovers around a key pivot level at $1.29954. This pivot point will be critical in determining the pair’s next move. Immediate resistance is positioned at $1.30108, followed by further resistance at $1.30262 and a higher target at $1.30431.
A break above these levels could indicate renewed bullish momentum, particularly if GBP/USD sustains above the 50-day Exponential Moving Average (EMA) of $1.29315. With the Relative Strength Index (RSI) reading at 64, the pair is close to overbought territory, signaling that the upside may be limited unless there’s a decisive move past the resistance zone.
On the downside, immediate support lies at $1.29674, with additional layers at $1.29473 and $1.29274. Should the pair drop below $1.29674, selling pressure could increase, pushing GBP/USD toward the 50 EMA, which acts as a significant support barrier. Market sentiment is closely tied to ongoing dollar strength and investor sentiment around the Bank of England’s interest rate outlook, which could influence GBP demand.
For traders, a breach below the pivot at $1.29954 could trigger selling interest, targeting $1.29531. However, a sustained push above $1.30108 would shift the outlook to bullish, with $1.30431 as an upper target in the short term.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.29951
Take Profit – 1.29531
Stop Loss – 1.30263
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$420/ -$312
Profit & Loss Per Mini Lot = +$42/ -$31
GBP/USD Price Analysis – Oct 30, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair continued its downward trend, trading sluggish around the 1.2976 level on Wednesday. This is because traders are watching closely for the United Kingdom's Autumn Forecast Statement, set to be announced at 12:45 GMT.
This marks Labour's first budget presentation in over 15 years, with Chancellor of the Exchequer Rachel Reeves expected to propose tax increases on various income sources and outline plans for higher spending to boost investment.
This could undermine the GBP as investors react negatively to such measures, fearing they could lead to slower economic growth or increased debt levels. This could contribute to further weakness in the GBP/USD pair
On the flip side, the losses in the GBP/USD pair may ease as the US dollar weakens ahead of important US economic data. The ADP Employment Change report for October and the Q3 flash GDP data will be released around 12:30 GMT, which could further impact the currency pair.
US Economic Data and Its Impact on GBP/USD Pair
On the US front, the broad-based US dollar turned bearish ahead of important economic data. As a result, the GBP/USD pair gained slightly, with investors focused on the upcoming ADP Employment Change report for October.
This report is expected to show that the private sector added 115,000 new jobs, down from 143,000 in September. However, the slowdown in job growth could worry investors about the job market, leading to increased expectations for interest rate cuts by the Federal Reserve.
Meanwhile, Tuesday’s JOLTS Job Openings data for September raised concerns about slowing job demand, as the number of new job openings was lower than expected. Investors are also looking ahead to the US Nonfarm Payrolls (NFP) data for October, which will be released on Friday, to gain more insights into the labor market.
Hence, the US economy is expected to grow steadily at a rate of 3.0% in the third quarter of the year, showing some resilience despite challenges in the job market.
Impact of UK Autumn Forecast Statement on GBP/USD Pair
Moreover, many investors are cautious about making strong moves ahead of the United Kingdom's Autumn Forecast Statement, which will be announced at 12:45 GMT.
This will be Labour’s first budget presentation in over 15 years. Chancellor of the Exchequer Rachel Reeves is expected to announce tax hikes on various income sources and outline plans for increased spending to boost investment.
According to UBS, the budget will focus on three main areas: changes to fiscal rules to allow more borrowing, a package of tax increases on capital gains, inheritance, pensions, and national insurance contributions for employers, and additional spending on investment projects.
Market participants are particularly interested in the details of the tax increases and spending plans, as these could affect inflation. Analysts at UBS believe that higher spending will likely raise the fiscal deficit to 3.1% of GDP.
This higher deficit could raise concerns about ongoing price pressures, leading traders to reconsider their expectations for the Bank of England’s (BoE) interest rate decisions for the rest of the year.
According to a recent Reuters poll, the BoE is expected to cut interest rates by 25 basis points in its upcoming meeting on November 7, bringing key borrowing rates down to 4.75%.
Therefore, the cautious investor sentiment and potential tax hikes in the UK may weaken the GBP/USD pair, as concerns over higher fiscal deficits could dampen confidence in the pound, especially if the Bank of England cuts interest rates as expected.
GBP/USD – Technical Analysis
GBP/USD is trading near the $1.29990 level, showing a slight decline and hovering just below the key pivot point at $1.30154. Immediate resistance lies at $1.30312, followed by stronger resistance at $1.30493 and $1.30644.
The Relative Strength Index (RSI) stands at 56, hinting at moderate bullish momentum but not yet in overbought territory. Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $1.29753, offering a nearby support level that could reinforce bullish sentiment if tested.
A sustained move above the $1.30154 pivot could spark buying interest, potentially driving the pair toward $1.30493 and beyond. However, if prices fall below immediate support at $1.29947, traders may see further downside risk toward $1.29793 and $1.29587.
For those seeking a buying opportunity, an entry above $1.29895 with a target at $1.30320 and a stop loss near $1.29562 aligns with the current technical setup, balancing risk with potential upside. GBP/USD is positioned near its pivot with a mildly bullish outlook, with buyers likely stepping in above $1.30154.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Insight: GBP/USD tests key pivot level, signaling potential upside above $1.30154.
- Key Levels: Immediate resistance at $1.30312; immediate support at $1.29947.
- Outlook: Mildly bullish if prices can hold above pivot point, with buying interest likely above $1.30154.
GBP/USD is trading near the $1.29990 level, showing a slight decline and hovering just below the key pivot point at $1.30154. Immediate resistance lies at $1.30312, followed by stronger resistance at $1.30493 and $1.30644.
The Relative Strength Index (RSI) stands at 56, hinting at moderate bullish momentum but not yet in overbought territory. Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $1.29753, offering a nearby support level that could reinforce bullish sentiment if tested.
A sustained move above the $1.30154 pivot could spark buying interest, potentially driving the pair toward $1.30493 and beyond. However, if prices fall below immediate support at $1.29947, traders may see further downside risk toward $1.29793 and $1.29587.
For those seeking a buying opportunity, an entry above $1.29895 with a target at $1.30320 and a stop loss near $1.29562 aligns with the current technical setup, balancing risk with potential upside. GBP/USD is positioned near its pivot with a mildly bullish outlook, with buyers likely stepping in above $1.30154.
GBP/USD - Trade Ideas
Entry Price – Buy Above 1.29895
Take Profit – 1.30320
Stop Loss – 1.29562
Risk to Reward – 1: 1.2
Profit & Loss Per Standard Lot = +$425/ -$333
Profit & Loss Per Mini Lot = +$42/ -$33
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD faces resistance at $1.2956, with bearish momentum below the 50 EMA.
- Key support levels are $1.2932 and $1.2921, with potential declines if breached.
- RSI indicates weakening buying strength, suggesting a possible continuation of the downtrend.
GBP/USD has resumed a downward trajectory after hitting a resistance level at $1.2975, with further declines pushing it towards the $1.2932 level. The British pound is currently trading below the 50-day Exponential Moving Average (EMA) at $1.2965, signaling bearish momentum.
A break below the $1.2950 pivot point indicates potential for further downside movement, particularly as the Relative Strength Index (RSI) stands at 36, showing weakened buying interest and potential oversold conditions in the near term.
Immediate resistance is at $1.2956, with the next levels at $1.2975 and $1.3012. On the downside, immediate support lies at $1.2932, followed by $1.2921 and $1.2886. With the RSI failing to hold above 40 and the price remaining under the 50 EMA, bearish sentiment could persist, provided there is no significant reversal above the $1.2956 level.
If GBP/USD breaks below the $1.2921 support level, it could extend losses toward the next key support at $1.2886, reflecting potential downside momentum in line with current market sentiment.
Conclusion: GBP/USD is poised for further declines, with key support at $1.2921 and immediate resistance at $1.2956. Sustained trading below the pivot point at $1.2950 reinforces the bearish outlook, while a break below $1.2921 could signal continued downside.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.29566
Take Profit – 1.29210
Stop Loss – 1.29872
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$356/ -$306
Profit & Loss Per Mini Lot = +$35/ -$30
GBP/USD Price Analysis – Oct 28, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair reversed its early bearish trend, gaining positive momentum around the 1.2982 mark and reaching an intraday high of 1.2988.
This upward movement likely reflects a weakening U.S. Dollar as investors shift their focus to key U.S. economic data releases scheduled for this week.
Moreover, the British Pound outperforms its major counterparts as markets anticipate the UK’s Autumn Forecast Statement, set for release on Wednesday.
On the flip side, the gains in the GBP/USD pair may be limited, as Labour's first budget is unlikely to propose significant spending increases due to the ongoing challenge of high inflation. This cautious outlook could undermine the GBP, as investors remain wary of the government's capacity to effectively address inflation concerns.
Impact of Economic Uncertainty on GBP/USD Performance
Despite the Pound Sterling performing well against most major currencies on Monday, it is still facing pressure ahead of the UK's Autumn Forecast Statement, set for Wednesday.
The Labour Party's first budget is unlikely to include major spending increases due to high inflation. The Chancellor of the Exchequer has promised to keep election commitments, which means no increases in income tax or national insurance, but there may be a rise in employers' national insurance by up to 2 percentage points.
Moreover, the Labour Party is expected to offer significant support for making housing more affordable.
Meanwhile, speculation about the Bank of England (BoE) cutting interest rates in its remaining meetings this year could dampen the appeal of the Pound Sterling.
Market expectations are leaning towards a 25 basis point rate cut in November and December, following dovish comments from BoE Governor Andrew Bailey during discussions at the IMF meeting last week.
Bailey noted that while disinflation is occurring more quickly than anticipated, there are still concerns about potential structural changes in the economy. This outlook could contribute to a cautious sentiment among investors regarding the Pound's future performance.
Therefore, the uncertainty surrounding the UK's Autumn Forecast Statement and potential interest rate cuts by the Bank of England may weaken the GBP/USD pair. Investors' cautious sentiment could lead to a decline in the Pound's value against the U.S. Dollar.
Impact of US Economic Data and Political Uncertainty on GBP/USD Performance
On the US front, the US dollar lost some of its traction but it is still near a three-month high of around 104.60. Investors are particularly interested in the preliminary Q3 Gross Domestic Product (GDP) and the October Nonfarm Payrolls (NFP) data, which will provide insights into the current state of economic growth and labor demand.
These economic indicators will heavily influence market expectations regarding the Federal Reserve's interest rate outlook for the rest of the year.
However, the Fed began its policy-easing cycle with an unusual 50 basis point interest rate cut in September due to concerns about rising economic risks, while maintaining confidence that inflation will stay on track to meet its 2% target. Traders anticipate further cuts of 25 basis points in November and December, as indicated by the CME FedWatch tool.
Moreover, the uncertainty surrounding the upcoming US presidential election is likely to support the US Dollar.
Financial experts discussed the potential impact of the election during last week's International Monetary Fund (IMF) meetings, particularly regarding former President Donald Trump's promise to raise tariffs, which could increase global supply chain costs.
Therefore, the mild bearish US Dollar, combined with key economic data influencing Federal Reserve rate expectations, could support the GBP/USD pair. However, ongoing uncertainties related to the US presidential election create volatility, impacting the Pound's strength against the Dollar.
GBP/USD – Technical Analysis
GBP/USD has resumed a downward trajectory after hitting a resistance level at $1.2975, with further declines pushing it towards the $1.2932 level. The British pound is currently trading below the 50-day Exponential Moving Average (EMA) at $1.2965, signaling bearish momentum.
A break below the $1.2950 pivot point indicates potential for further downside movement, particularly as the Relative Strength Index (RSI) stands at 36, showing weakened buying interest and potential oversold conditions in the near term.
Immediate resistance is at $1.2956, with the next levels at $1.2975 and $1.3012. On the downside, immediate support lies at $1.2932, followed by $1.2921 and $1.2886. With the RSI failing to hold above 40 and the price remaining under the 50 EMA, bearish sentiment could persist, provided there is no significant reversal above the $1.2956 level.
If GBP/USD breaks below the $1.2921 support level, it could extend losses toward the next key support at $1.2886, reflecting potential downside momentum in line with current market sentiment.
Conclusion: GBP/USD is poised for further declines, with key support at $1.2921 and immediate resistance at $1.2956. Sustained trading below the pivot point at $1.2950 reinforces the bearish outlook, while a break below $1.2921 could signal continued downside.
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GBP/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward momentum, holding strong around the 1.2995 level. This is quite impressive, especially given the typically bullish US dollar, which tends to push prices down.
However, the Pound Sterling (GBP) found support following comments from Bank of England Monetary Policy Committee member Megan Greene. She shared a slightly hawkish perspective on interest rates during her discussion with the Atlantic Council at the IMF meeting on Tuesday. This was seen as a key factor that kept the GBP/USD pair higher.
Looking ahead, traders are keeping a close eye on the upcoming flash S&P Global/CIPS Purchasing Managers Index (PMI) data for October, set to be released on Thursday. Meanwhile, the expectations are for the PMI report to show modest growth in overall business activity, which could further influence market sentiment.
Pound Sterling Strengthens on Hawkish BoE Outlook Amid Upcoming Key Speech
As we mentioned, the British currency has gained traction right after hawkish comments from Bank of England (BoE) Monetary Policy Committee member Megan Greene. During a discussion with the Atlantic Council at the International Monetary Fund (IMF) meeting, Greene provided a slightly hawkish outlook on interest rates.
She emphasized the need for monetary policy to continue addressing inflation to meet target levels. When asked if the recent decline in UK inflation would affect her vote in November, Greene noted that the drop was influenced by volatile factors and suggested she wouldn’t rely too heavily on this data.
It's important to remember that Greene was one of the four MPC members who voted to keep interest rates unchanged in August when the BoE reduced rates by 25 basis points to 5%. Moving ahead, the next key event for the Pound Sterling will be BoE Governor Andrew Bailey’s speech scheduled for 18:45 GMT.
Investors will be keen to hear his insights for clues on potential monetary policy changes in November and December. Meanwhile, traders are already anticipating another interest rate cut in November, which could further influence the Pound's performance.
Therefore, the Pound's strengthening due to Megan Greene's hawkish comments may bolster the GBP/USD pair. If BoE Governor Bailey's upcoming speech suggests a more cautious stance on rate cuts, it could support the Pound further, enhancing its value against the US dollar.
US Dollar Strengthens Amid Election Uncertainty, Pressuring GBP/USD
On the US front, the broad-based US dollar has been gaining strength, putting pressure on the Pound Sterling, which is struggling to stay above the psychological resistance level of 1.3000 against the US dollar during Wednesday's London session. This increase in the dollar's appeal as a safe haven comes amid uncertainty surrounding the upcoming US presidential elections on November 5.
However, recent polls show Vice President Kamala Harris with a slight lead over former President Donald Trump, raising concerns among investors. Market participants are worried that if Trump wins, it could lead to higher tariffs, negatively affecting exports from key trading partners such as the Eurozone, Canada, Mexico, China, and Japan.
Moreover, expectations for a gradual easing of Federal Reserve policies this year and into 2025 have further boosted the dollar's appeal. The International Monetary Fund (IMF) has also raised its growth forecast for the US in 2023 to 2.8% from 2.6% previously, along with increasing GDP projections for 2025 to 2.2%.
Therefore, the strengthening US dollar, driven by election uncertainties and higher growth forecasts, places downward pressure on the GBP/USD pair.
GBP/USD – Technical Analysis
Technically, GBP/USD is trading just below its pivot point of $1.30087, indicating a potential for range-bound price action in the short term. Immediate resistance is noted at $1.30716, with higher resistance levels at $1.31246 and $1.31760. A move above $1.30716 could push the pair toward these higher resistance levels, but momentum appears to be fading.
On the downside, immediate support is found at $1.29495, with subsequent support at $1.28987 and a deeper level at $1.28242. A breach below $1.29495 would likely signal increased selling pressure, potentially leading to a more significant correction toward the lower support zones.
The Relative Strength Index (RSI) is at 44, suggesting a lack of strong directional bias as the pair remains in neutral territory. Meanwhile, the 50-day Exponential Moving Average (EMA) at $1.30268 indicates that GBP/USD is struggling to break back above critical resistance, which reinforces a slightly bearish outlook for the near term.
For traders, a short position may be considered if GBP/USD drops below $1.30252, with a take-profit target at $1.28981 and a stop-loss at $1.30761 to manage potential upside risks.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD pivot point at $1.30087 suggests range-bound conditions.
- Immediate resistance at $1.30716; a break above may lead to $1.31246.
- RSI at 44 and prices below the 50-day EMA indicate limited bullish momentum.
Technically, GBP/USD is trading just below its pivot point of $1.30087, indicating a potential for range-bound price action in the short term. Immediate resistance is noted at $1.30716, with higher resistance levels at $1.31246 and $1.31760. A move above $1.30716 could push the pair toward these higher resistance levels, but momentum appears to be fading.
On the downside, immediate support is found at $1.29495, with subsequent support at $1.28987 and a deeper level at $1.28242. A breach below $1.29495 would likely signal increased selling pressure, potentially leading to a more significant correction toward the lower support zones.
The Relative Strength Index (RSI) is at 44, suggesting a lack of strong directional bias as the pair remains in neutral territory. Meanwhile, the 50-day Exponential Moving Average (EMA) at $1.30268 indicates that GBP/USD is struggling to break back above critical resistance, which reinforces a slightly bearish outlook for the near term.
For traders, a short position may be considered if GBP/USD drops below $1.30252, with a take-profit target at $1.28981 and a stop-loss at $1.30761 to manage potential upside risks.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.30252
Take Profit – 1.28981
Stop Loss – 1.30761
Risk to Reward – 1: 2.5
Profit & Loss Per Standard Lot = +$1271/ -$509
Profit & Loss Per Mini Lot = +$127/ -$50
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD trades near a pivot point at $1.30322, indicating possible bearish momentum.
- The RSI at 55.93 suggests neutral sentiment, but further declines may ensue below $1.30148.
- 50 EMA acts as a key support level, with prices needing to hold below it to confirm further downside.
GBP/USD is currently trading at $1.30431, with minor fluctuations indicating consolidation around this level. The pair faces selling pressure after peaking at $1.30816, failing to break a key resistance zone.
The GBP/USD has retraced from its resistance zone of $1.30821, and the price is currently hovering near the pivot point of $1.30322. The pattern on the chart indicates a bearish bias, especially after the pair failed to break above the resistance level at $1.30821.
Technical indicators present mixed signals. The Relative Strength Index (RSI) is currently at 55.93, indicating that the market is neither overbought nor oversold, which suggests that there’s still room for downside movement. The 50-period Exponential Moving Average (EMA) at $1.30322 acts as a dynamic support level, but the price is trending below it, hinting at potential bearish pressure.
Key levels to watch include the immediate support at $1.30148. A break below this level could accelerate selling towards the next support levels at $1.29953 and $1.29733. Conversely, if prices rebound from $1.30148, immediate resistance stands at $1.30816, with a key upside target of $1.31301.
Conclusion: GBP/USD’s outlook remains bearish below $1.30559. Traders may consider entering short positions below this level, targeting $1.30148 with a stop-loss at $1.30821. The bearish sentiment is reinforced by the pair trading below the pivot point and immediate resistance zone.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.30559
Take Profit – 1.30148
Stop Loss – 1.30821
Risk to Reward – 1: 1.5
Profit & Loss Per Standard Lot = +$411/ -$262
Profit & Loss Per Mini Lot = +$41/ -$26
GBP/USD Price Analysis – Oct 21, 2024
Daily Price Outlook
During the European session on Monday, the GBP/USD pair struggled to maintain its upward trend, turning bearish around the 1.3026 level and hitting an intraday low of 1.3012. However, the surprise drop in the UK Consumer Price Index (CPI) has increased expectations for a 25 basis point (bps) interest rate cut at the upcoming November 7 meeting.
Meanwhile, money markets are pricing in the possibility of another BoE rate cut in December, which could further undermine the British Pound (GBP). This situation, combined with the underlying bullish sentiment surrounding the US Dollar (USD), reinforces the negative outlook for the GBP/USD pair. However, the strength of the US Dollar was supported by expectations of modest rate cuts by the Federal Reserve (Fed).
UK Inflation Decline Fuels Rate Cut Expectations, Weighing on GBP/USD Pair
On the data front, the surprising drop in the UK Consumer Price Index (CPI) has brought inflation to its lowest level since April 2021, falling below the Bank of England's (BoE) 2% target. This development has raised expectations for a 25 basis point (bps) interest rate cut at the BoE's meeting on November 7. Moreover, money markets are considering the possibility of another rate cut in December, which could further weaken the British Pound (GBP).
As a result, any short-term increase in the GBP/USD pair could be seen as a selling opportunity. However, bearish traders may choose to wait for the pair to fall below the important 1.3000 psychological level before making new bets. If the pair does drop below this mark, traders may position themselves for a further decline toward the support level at the 100-day Simple Moving Average (SMA), currently around the 1.2960 region.
US Dollar Strengthens Amid Fed's Stance and UK Inflation Data, Pressuring GBP/USD Pair
On the US front, the US dollar is gaining strength as expectations of modest rate cuts by the Federal Reserve (Fed) support higher US Treasury yields. Investors have dismissed the chance of a significant interest rate cut by the Fed in November, as recent economic data shows that the US economy remains resilient.
Fed officials, including Atlanta Fed President Raphael Bostic, have expressed that there is no rush to cut rates, with forecasts suggesting rates may eventually fall to around 3-3.5% by the end of next year. This stability in US monetary policy contrasts sharply with the weak inflation data from the UK, which has raised expectations for more aggressive easing measures from the Bank of England.
As a result, the stronger US Dollar and shifting monetary policies create a challenging environment for the GBP/USD pair. The combination of a resilient US economy and potential rate cuts from the Bank of England may lead to further declines in the British Pound's value against the dollar.
GBP/USD – Technical Analysis
GBP/USD is currently trading at $1.30431, with minor fluctuations indicating consolidation around this level. The pair faces selling pressure after peaking at $1.30816, failing to break a key resistance zone.
The GBP/USD has retraced from its resistance zone of $1.30821, and the price is currently hovering near the pivot point of $1.30322. The pattern on the chart indicates a bearish bias, especially after the pair failed to break above the resistance level at $1.30821.
Technical indicators present mixed signals. The Relative Strength Index (RSI) is currently at 55.93, indicating that the market is neither overbought nor oversold, which suggests that there’s still room for downside movement. The 50-period Exponential Moving Average (EMA) at $1.30322 acts as a dynamic support level, but the price is trending below it, hinting at potential bearish pressure.
Key levels to watch include the immediate support at $1.30148. A break below this level could accelerate selling towards the next support levels at $1.29953 and $1.29733. Conversely, if prices rebound from $1.30148, immediate resistance stands at $1.30816, with a key upside target of $1.31301.
Conclusion: GBP/USD’s outlook remains bearish below $1.30559. Traders may consider entering short positions below this level, targeting $1.30148 with a stop-loss at $1.30821. The bearish sentiment is reinforced by the pair trading below the pivot point and immediate resistance zone.
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