Daily Price Outlook

On October 04, the GBP/USD trading trajectory has taken an intriguing turn. Presently, this currency pair is floating around the 1.20551 pivot point, reflecting the complexities and nuances of the international currency market. The significant technical levels to monitor in the short term include immediate resistance at 1.21071, followed by 1.21398 and 1.21878. Conversely, the asset has marked its immediate support level at 1.20041, with additional cushions positioned at 1.19537 and 1.18987.

When observing the technical indicators, the Relative Strength Index (RSI) for the GBP/USD is currently at 33, hinting at a bearish sentiment. Traditionally, an RSI below 50 leans toward bearish momentum, and the GBP/USD's current positioning suggests it is verging on the oversold region. This sentiment is mirrored in the 50-Day Exponential Moving Average (50 EMA), which stands at 1.218. Given that the pair's price is beneath this level, there's an implied short-term bearish undertone.

From the perspective of chart patterns, the GBP/USD's movement is showing signs reminiscent of a Fibonacci retracement. The pair appears poised to bounce off the 1.2050 region, potentially aiming for the 23.6% Fibonacci retracement level at 1.2100 or the 38.2% level at 1.2137. This suggests that the GBP/USD might undergo a short-term bullish correction.

In conclusion, despite the overarching bearish sentiment for the GBP/USD pair, there seems to be potential for a bullish correction, particularly if the price sustains above the 1.2050 level. Traders might consider initiating buy orders above this threshold and explore selling options should this level be breached. As always, it's crucial to remain vigilant of any emerging fundamental news that could recalibrate the market landscape.

GBP/USD - Trade Idea

Entry Price – Buy Above 1.20535

Take Profit – 1.21377

Stop Loss – 1.19960

Risk to Reward – 1: 1.45

Profit & Loss Per Standard Lot = +$842/ -$575

Profit & Loss Per Micro Lot = +$84/ -$57

Daily Price Outlook

Despite a recent dip, the British Pound (GBP) is bouncing back as investors believe the UK is improving at managing the impact of higher interest rates from the Bank of England (BoE). It is worth noting that the BoE raised rates to 5.25% to protect the economy, but now they have hit a pause.

However, the GBP/USD pair is struggling, sitting below the 1.2200 mark, and has slumped for five weeks. Currently, it's around 1.2180, down 0.16% for the day. This is mainly due to the US Dollar (USD) gaining strength, which puts pressure on the GBP/USD pair.

US Inflation and Economic Indicators Impacting Currency Markets

According to the US Bureau of Economic Analysis, the PCE Price Index, a measure of inflation, rose by 3.5% compared to the same time last year in August, slightly up from July's 3.4%. The Core PCE Price Index, which the Federal Reserve closely watches, increased by 3.9% year-on-year, down from 4.3% in July.

Every month, the PCE Price Index and Core PCE Price Index went up by 0.4% and 0.1%, respectively, below what experts expected. Personal income and personal spending both increased by 0.4% month-on-month, as predicted.

Therefore, Fed officials have differing views on interest rates, with some suggesting caution while awaiting more data. Federal Reserve Chair Jerome Powell's upcoming speech could impact the US dollar and the GBP/USD pair.

BoE Policy and US Economic Data Impact GBP/USD

Conversely, BoE policymakers have mentioned that they could either raise or keep interest rates steady following their recent decision to pause rate hikes. However, the market expects the BoE to stick with its current monetary policy in the upcoming meeting, putting pressure on the British Pound (GBP).

With no significant UK economic data coming out this week, the GBP/USD pair's direction depends on the US Dollar's performance. On Monday, the US ISM Manufacturing PMI for September and hearing from Fed Chair Powell is in the spotlight.

Later in the week, the US ADP Employment Change and ISM Services PMI for September will be the focus. The focus will be on Friday's US nonfarm payrolls report.

GBP/USD - Technical Analysis

The GBP/USD pair recently reacted bearishly upon hitting the 1.2280 mark, suggesting a possible return to its primary downward trend. This is further illustrated by the bearish channel on the chart, pointing towards a potential descent to the 1.2110 level.

Today's outlook for the pair is bearish, a sentiment backed by the negative influence of the 50-Day EMA. However, the 1.2280 level remains pivotal. If the GBP/USD surpasses this resistance, we might witness a shift towards a bullish correction, targeting 1.2350. Expected trading for the day ranges between support at 1.2100 and resistance at 1.2250.

Regarding technical indicators, the RSI stands at 46, portraying a neutral to slightly bearish stance. An RSI below 50 tends to hint at a bearish sentiment, though it's still distant from the extreme oversold benchmark of 30.

In summary, while the short-term forecast for GBP/USD leans bearish, traders should watch the 1.2280 level closely. Surpassing this resistance could alter the immediate market trajectory.

Daily Price Outlook

The GBP/USD currency pair has recently shown some interesting behavior. Having reached the previously anticipated target of 1.2280, the pair displayed a bearish rebound from this level. This move hints at a potential return to its primary bearish trajectory, reinforced by the bearish channel visible on the chart. With this, there's an anticipation of the pair heading toward the 1.2110 mark, establishing it as the next key bearish target.

Given this backdrop, the forecast for today leans bearish. This outlook is further supported by the negative influence exerted by the 50-Day Exponential Moving Average (EMA50). However, it's important to note a key resistance level at 1.2280. Should the GBP/USD break above this point, it could potentially steer the currency pair towards a bullish correction, with the next target set at 1.2350. For the day, the trading range is predicted to lie between the 1.2100 support and the 1.2250 resistance.

Zooming in on the technical indicators:

RSI (Relative Strength Index): Currently standing at 46, the RSI provides a neutral-to-bearish sentiment. Typically, an RSI value above 70 denotes overbought conditions, whereas anything below 30 indicates oversold conditions. In its current state, being below 50, the RSI slightly leans towards a bearish sentiment.

In conclusion, the GBP/USD's trajectory for today is expected to be predominantly bearish, given the current technical indicators and recent price actions. Traders should, however, remain vigilant around the 1.2280 resistance level, as any breach could modify the short-term outlook.

GBP/USD - Trade Idea

Entry Price – Sell Below 1.21981

Take Profit – 1.21036

Stop Loss – 1.22868

Risk to Reward – 1: 1

Profit & Loss Per Standard Lot = +$945/ -$887

Profit & Loss Per Micro Lot = +$94/ -$88

Daily Price Outlook

The GBP/USD currency pair failed to stop its five-day losing streak and remained well offered around below 1.2150 mark as investors are worried that the UK's economy might go into a recession. This is mainly because the job market is not doing well, and people are not spending much money. It is worth recaling that the Bank of England was supposed to raise interest rates to control inflation, but now they might not do that, which could make prices go up even more.

Furthermore, the US dollar is performing strongly, further contributing to the GBP/USD decline. The Federal Reserve in the US is being cautious with its monetary policies, which is boosting the strength of the US dollar. Traders are closely watching for any changes in the UK's GDP data, but it's expected to remain stable.

BoE's Rate Pause Adds Pressure on GBP/USD Amid Economic Concerns

It's important to highlight that the Bank of England surprised everyone by halting its planned interest rate increases due to worries about the UK's struggling economy and rising uncertainty about inflation. The spike in global oil prices is also driving up energy costs, which could worsen inflation and possibly lead to a challenging situation called stagflation.

Investors are concerned about the global economy and the possibility of higher interest rates. In the UK, weak demand has led to job cuts by companies, even though wages are still rising, keeping inflation a concern. Despite strong wage growth and persistent inflation, the BoE is more focused on economic stability, as seen in its recent decision to pause rate hikes. Therefore, this unexpected move by the Bank of England has put pressure on the GBP/USD currency pair.

Impact on GBP/USD Pair Amid Strong US Dollar and Hawkish Federal Reserve

Despite mixed US economic data, the US dollar is strengthening. While US Consumer Confidence slipped in September, Building Permits and the House Price Index showed positive signs in August and July. The US dollar's resilience is mainly due to the Federal Reserve's hawkish stance on interest rates, boosting US Treasury yields, which are near a 14-year high at 4.51%. Traders are watching upcoming reports like US Durable Goods Orders and the Core PCE Price Index, expected to ease slightly from 4.2% to 3.9%.

The US Dollar Index (DXY) is at 106.30, its highest since last December. The Federal Reserve aims for a 25 basis point rate hike by year-end and rates above 5% next year, putting pressure on the GBP/USD pair as the robust US dollar outweighs lackluster US economic data.

GBP/USD - Technical Analysis

The GBP/USD pair has stabilized around the 1.2155 mark since this morning. As long as the price remains below the 1.2210 threshold, the bearish outlook continues to be the predominant forecast for the foreseeable future. This perspective is reinforced by the negative influence exerted by the EMA50. It's worth noting that our anticipated targets commence at 1.2135 and, upon surpassing this, extend to 1.2030.

For today, the projected trading range lies between a support of 1.2050 and a resistance of 1.2200.

Daily Price Outlook

The GBP/USD currency pair failed to stop its bearish rally and faced further downward trend due to concerns over the UK's weak economy and rising inflation risks. It is worth noting that the Bank of England unexpectedly paused its plan to increase interest rates, hinting at possible economic slowdown. On the other hand, the US Dollar gained strength as the Federal Reserve hinted at more rate hikes. This made the Pound weaker against the Dollar. Federal Reserve Bank officials highlighted the need for more rate hikes despite a cooling inflation. This added pressure on the GBP/USD pair, making it challenging for the Pound to gain ground against the Dollar.

UK Economic Weakness and GBP/USD Decline

It is worth mentioning that the UK economy is getting weaker and the reason could be attributed to the uncertainty about interest rates and upcoming elections. However, the UK Prime Minister, Rishi Sunak, promised to lower inflation to 5.3% by the end of the year, but the Bank of England's recent decision to pause increasing interest rate suggests they might struggle to keep that promise.

Furthermore, the higher interest rates have hit the UK's economic activities, causing a decline in manufacturing and services PMI. Services PMI has dropped below the critical 50.0 mark for the second consecutive time, indicating a struggle for the service sector.

These factors are concerning for the UK's economic strength. Therefore, the GBP/USD currency pair faced a decline as uncertainty about interest rates and weak economic indicators in the UK persisted.

Strong US Dollar Impacts GBP/USD Pair

Another factor affecting the GBP/USD pair is the strong US dollar. This is mainly because the US Federal Reserve has taken a tough stance on raising interest rates to control inflation. They want to keep interest rates high for a longer time to control inflation and have even hinted at raising rates again by the end of the year. This has made investors more interested in US bonds, pushing their yields to levels not seen since 2007. Plus, with global uncertainty, the US dollar is seen as a safe choice. Consequently, these factors have exerted pressure on the GBP/USD pair, resulting in the US Dollar gaining strength against the British Pound (GBP).

GBP/USD - Technical Analysis

The GBP/USD pair exhibits an intensified bearish momentum, methodically nearing our anticipated target of 1.2200. We anticipate this downward trajectory to persist, with subsequent objectives set around the 1.2135 mark.

The EMA50 consistently underpins the projected bearish trend, which unfolds systematically within the bearish channel depicted on the chart. It's imperative to note that surpassing 1.2310 would negate this bearish outlook, prompting the pair to undergo an intraday bullish realignment.

For today, the projected trading parameters are established between a support at 1.2150 and a resistance at 1.2300.

Daily Price Outlook

The GBP/USD pair exhibits an intensified bearish momentum, methodically nearing our anticipated target of 1.2200. We anticipate this downward trajectory to persist, with subsequent objectives set around the 1.2135 mark.

The EMA50 consistently underpins the projected bearish trend, which unfolds systematically within the bearish channel depicted on the chart. It's imperative to note that surpassing 1.2310 would negate this bearish outlook, prompting the pair to undergo an intraday bullish realignment.

For today, the projected trading parameters are established between a support at 1.2150 and a resistance at 1.2300.

GBP/USD - Trade Idea 

Entry Price – Sell Below 1.22581

Take Profit – 1.21951

Stop Loss – 1.22876

Risk to Reward – 1: 2

Profit & Loss Per Standard Lot = +$630/ -$295

Profit & Loss Per Micro Lot = +$63/ -$29

Daily Price Outlook

During the European trading session, the GBP/USD currency pair has failed to stop its downward rally, experiencing a 0.35% decline, placing it at 1.2250. Despite a minor bounce from the 1.2230 region, near a six-month low, the pair struggles to gain momentum. But, the persistent bearish trend suggests potential challenges for the pound against the US dollar in the near term.

Fed's Hawkish Stance and US Dollar Impact on GBP/USD

The broad-based US dollar remains near its highest level since June, propelled by the Federal Reserve's hawkish stance. However, this dollar's strength was seen as a challenging factor for the GBP/USD currency pair. However, the Fed opted to maintain rates at a 22-year peak, between 5.25% and 5.50%, as anticipated. Furthermore, they hinted at a potential rate hike by year-end due to persistent inflation.

It is worth mentioning that the Fed's 'dot-plot' indicates a benchmark rate of 5.1% next year, signaling fewer rate cuts in 2024 than previously projected. Rising US Treasury bond yields raise economic concerns, reducing appetite for riskier assets and impacting GBP/USD.

Surprise BoE Decision Adds Pressure on British Pound

Aside from that, the British Pound faced more pressure after the surprise decision by the Bank of England (BoE) to keep the benchmark interest rate steady at 5.25%. The BoE chose to keep the benchmark interest rate unchanged at 5.25%, contrary to expectations of a 0.25% increase to 5.50%. This surprising move came as inflation slowed, the UK labor market cooled, and concerns of a looming recession emerged. It marked the first time since December 2021 that the BoE didn't raise rates and even revised down its growth forecast for July-September to just 0.1% from the previous 0.4%. This unexpected pause weighed on the Pound and contributed to the GBP/USD pair losses.

GBP/USD - Technical Analysis

Yesterday, the GBP/USD pair exhibited a pronounced bearish behavior, reaching our extended target of 1.2255. Subsequently, it attempted a retest of the resistance at 1.2310, which it had previously breached. Notably, the stochastic indicator has displayed a diminishing bullish momentum, suggesting a potential push for the price to continue its primary bearish course with an upcoming target set at 1.2200.

Given this context, we anticipate a continuation of the bearish trajectory for the foreseeable future, contingent on the price remaining below 1.2310. It's essential to highlight that the EMA50 continues to bolster the current bearish trend within the discernible bearish channel on the chart. Today's anticipated trading range spans from a support level at 1.2190 to a resistance level at 1.2350.

Daily Price Outlook

Yesterday, the GBP/USD pair exhibited a pronounced bearish behavior, reaching our extended target of 1.2255. Subsequently, it attempted a retest of the resistance at 1.2310, which it had previously breached. Notably, the stochastic indicator has displayed a diminishing bullish momentum, suggesting a potential push for the price to continue its primary bearish course with an upcoming target set at 1.2200.

Given this context, we anticipate a continuation of the bearish trajectory for the foreseeable future, contingent on the price remaining below 1.2310. It's essential to highlight that the EMA50 continues to bolster the current bearish trend within the discernible bearish channel on the chart. Today's anticipated trading range spans from a support level at 1.2190 to a resistance level at 1.2350.

GBP/USD - Trade Idea 

Entry Price – Sell Limit 1.23304

Take Profit – 1.22366

Stop Loss – 1.23854

Risk to Reward – 1: 1.7

Profit & Loss Per Standard Lot = +$938/ -$550

Profit & Loss Per Micro Lot = +$93/ -$55

Daily Price Outlook

The GBP/USD currency pair has struggled to break its downward momentum, continuing its descent below the crucial 1.2300 support level. This decline has persisted for two consecutive days and currently stands at its lowest point since early June. However, the main reason for this decline is the strength of the US Dollar. Following the Federal Reserve's recent FOMC meeting, the US Dollar staged an impressive rebound and is now approaching a six-month high. This resurgence in the US Dollar's value is exerting substantial pressure on the GBP/USD pair. In simpler terms, the robust US Dollar is causing the British Pound (GBP) to weaken within this currency pair.

Notably, the Federal Reserve's more hawkish stance is contributing to the USD's strength, and there are also expectations of the Bank of England (BoE) pausing its interest rate hikes, which adds to the downward pressure.

Fed's Interest Rate Decision and USD Outlook

As expected, the Federal Reserve decided to keep interest rates unchanged. However, they still have plans for rates to reach between 5.5% and 5.75% this year, with the possibility of one more 0.25% increase in 2023. They've also adjusted their outlook for next year, now anticipating a rate of 5.1%, which is a change from their previous projection of four rate cuts in 2024 to just two. Hence, the "higher-for-longer" approach, keeping US Treasury bond yields elevated, is boosting the appeal of the US Dollar as a safe-haven currency. Alongside cautious market sentiment, this is diminishing interest in riskier assets.

Market Factors and Outlook: GBP/USD Dynamics

Furthermore, the British Pound is facing pressure due to expectations of the Bank of England (BoE) pausing its interest rate hikes. As a result, this is pushing down the value of the GBP/USD pair. Another factor putting pressure on the GBP/USD currency pair is the unexpected drop in the UK's annual inflation rate (CPI) from 6.8% in July to 6.7% in August, defying expectations of a rise to 7%. This decline also affected the core CPI, which excludes volatile items, dropping from 6.9% in July to 6.2% in August. These figures align with concerns of a potential economic recession and signs of a cooling job market in the UK, reinforcing market expectations. As a result, all eyes are on the Bank of England's upcoming interest rate decision, scheduled for later this week.

Looking forward, traders will be watching important US economic data like Initial Weekly Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales. These, along with US bond yields and overall market sentiment, could affect the value of the US Dollar and potentially impact the GBP/USD pair.

GBP/USD - Technical Analysis

The GBP/USD pair has successfully met our primary anticipated target at 1.2310 and is exhibiting a negative bias around this level. This enhances the probability of persisting bearish momentum, potentially descending further to targets of 1.2255 and subsequently 1.2200.

The prevalent bearish channel orchestrates the anticipated downtrend, receiving consistent reinforcement from the EMA50. It's crucial to note that any inability to breach the 1.2310 level may instigate a price rebound, giving rise to a short-term bullish trend aiming to test the 1.2435 regions. For today's trading, we anticipate boundaries ranging from a support at 1.2210 to a resistance at 1.2370.

Daily Price Outlook

The GBP/USD pair has successfully met our primary anticipated target at 1.2310 and is exhibiting a negative bias around this level. This enhances the probability of persisting bearish momentum, potentially descending further to targets of 1.2255 and subsequently 1.2200.

The prevalent bearish channel orchestrates the anticipated downtrend, receiving consistent reinforcement from the EMA50. It's crucial to note that any inability to breach the 1.2310 level may instigate a price rebound, giving rise to a short-term bullish trend aiming to test the 1.2435 regions. For today's trading, we anticipate boundaries ranging from a support at 1.2210 to a resistance at 1.2370.

GBP/USD - Trade Idea 

Entry Price – Sell Limit 1.23489

Take Profit – 1.22529

Stop Loss – 1.24310

Risk to Reward – 1: 1.7

Profit & Loss Per Standard Lot = +$960/ -$821

Profit & Loss Per Micro Lot = +$96/ -$82