GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD trades at $1.27628, slightly below the pivot point of $1.2801, showing cautious sentiment.
- 50-day EMA at $1.2759 offers support; RSI at 54 indicates a neutral to mildly bullish trend.
- Buy limit at $1.27486 with a target of $1.28008; stop-loss set at $1.27173 to manage risk.
The British pound is trading around $1.27628, experiencing a modest decline of 0.03% in the current session.
On the 4-hour chart, GBP/USD is hovering just below the pivot point at $1.2801, indicating a cautious market sentiment.
The immediate resistance is positioned at $1.2802, a level that, if breached, could lead the pair to test higher resistance levels at $1.2839 and $1.2889.
However, the pound remains under pressure, with immediate support seen at $1.2708. Should this support fail to hold, the next downside targets are at $1.2672 and $1.2633.
The 50-day Exponential Moving Average (EMA) is slightly below the current price, positioned at $1.2759, suggesting that the pair may find support around this level.
The Relative Strength Index (RSI) is currently at 54, indicating a neutral to mildly bullish outlook.
This RSI reading implies that the market is neither overbought nor oversold, providing room for potential upward movement if positive momentum gains traction.
Given the current technical setup, a buy limit order at $1.27486 could be strategically advantageous, with a take-profit target at $1.28008.
A stop-loss order should be placed at $1.27173 to mitigate risk in the event of further downside movement.
The key focus for traders will be on whether the pound can reclaim the pivot point at $1.2801, which could open the door for a more substantial rally.
GBP/USD - Trade Ideas
Entry Price – Buy Limit 1.27486
Take Profit – 1.28008
Stop Loss – 1.27173
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$522/ -$313
Profit & Loss Per Mini Lot = +$52/ -$31
GBP/USD Price Analysis – Aug 12, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to maintain its upward momentum, trading around 1.2761 and reaching an intra-day high of 1.2782.
This rally was supported by steady market sentiment, which bolstered the GBP. Additionally, expectations of a 25 basis point interest rate cut by the Federal Reserve in September contributed to the GBP's strength against the USD.
Investors are closely watching upcoming UK employment data for June and the Consumer Price Index (CPI) for July, scheduled for release on Tuesday and Wednesday, respectively, which further influenced the GBP's performance.
GBP/USD Volatility Expected Amidst BoE Rate Cut Speculations and Inflation Concerns
On the BoE front, the Pound Sterling gained traction against most major currencies during Monday’s European session.
Investors are keenly awaiting the UK Employment data for June and the Consumer Price Index (CPI) for July, set to be released on Tuesday and Wednesday.
The UK Employment report is expected to show a slight rise in the ILO Unemployment Rate to 4.5% from 4.4%.
Average Earnings Excluding Bonuses, a key indicator of wage growth, is forecasted to slow significantly to 4.6% from 5.7%.
However, the decline in wage growth could lead to expectations of interest rate cuts by the Bank of England (BoE).
Despite this, BoE MPC member Catherine Mann expressed concern about rising goods and services prices and persistent wage pressures, indicating that inflation risks may remain, even with annual headline inflation at the bank’s 2% target.
Therefore, the GBP/USD pair may experience volatility as investors react to potential rate cuts from the BoE and ongoing inflation concerns, balancing expectations against the latest employment and wage data.
Impact of Federal Reserve Rate Cut Expectations and CPI Data on GBP/USD
On the US front, traders are increasingly betting on a Federal Reserve (Fed) rate cut at the next meeting, which could be positive for the GBP/USD pair.
Lower interest rates often lead to a weaker US dollar, making the GBP/USD pair more attractive.
According to the CME FedWatch Tool, there is a nearly even chance of a rate cut, with a 49.5% probability of a 0.25% cut and a 50.5% probability of a 0.50% cut in September. This anticipation is contributing to increased interest in the GBP/USD pair.
On the data front, the Consumer Price Index (CPI) for July, scheduled for release on Wednesday, is expected to show a 0.2% increase for both headline and core inflation, following a 0.1% decline in headline CPI in June.
Meanwhile, the Producer Price Index (PPI), set for release on Tuesday, is forecast to rise by 0.1% in July, after a 0.2% gain in June.
If the CPI comes in higher than expected, it could raise concerns about the Fed's plans for aggressive rate cuts, potentially exerting downward pressure on Gold prices.
If CPI exceeds expectations, concerns about the Fed's rate cut plans could boost the US dollar, potentially weakening the GBP/USD pair. Conversely, a rate cut would likely strengthen GBP/USD.
GBP/USD - Technical Analysis
The British pound is trading around $1.27628, experiencing a modest decline of 0.03% in the current session.
On the 4-hour chart, GBP/USD is hovering just below the pivot point at $1.2801, indicating a cautious market sentiment.
The immediate resistance is positioned at $1.2802, a level that, if breached, could lead the pair to test higher resistance levels at $1.2839 and $1.2889.
However, the pound remains under pressure, with immediate support seen at $1.2708. Should this support fail to hold, the next downside targets are at $1.2672 and $1.2633.
The 50-day Exponential Moving Average (EMA) is slightly below the current price, positioned at $1.2759, suggesting that the pair may find support around this level.
The Relative Strength Index (RSI) is currently at 54, indicating a neutral to mildly bullish outlook.
This RSI reading implies that the market is neither overbought nor oversold, providing room for potential upward movement if positive momentum gains traction.
Given the current technical setup, a buy limit order at $1.27486 could be strategically advantageous, with a take-profit target at $1.28008.
A stop-loss order should be placed at $1.27173 to mitigate risk in the event of further downside movement.
The key focus for traders will be on whether the pound can reclaim the pivot point at $1.2801, which could open the door for a more substantial rally.
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EUR/USD Price Analysis – Aug 12, 2024
GBP/USD Price Analysis – Aug 07, 2024
Daily Price Outlook
During the European trading session on Wednesday, the GBP/USD currency pair maintained its upward trend and remained well bid around 1.2712 level, hitting the intra-day high of 1.2718 level.
However, the reason for its upward trend can be attributed to the rising expectations of a 50-basis point rate cut by the Fed in September. This undermined the US dollar an contributed to the GBPUSD pair gains.
CME FedWatch tool indicates 67.5% odds of a 50-basis point Fed rate cut in September, up from 13.2% last week. On the other hand, the British Pound may struggle due to rising odds of a quarter-basis point rate cut by the BoE in August.
Bearish US Dollar Boosts GBP/USD Amid Rate Cut Expectations
On the US front, the broad-based US dollar failed to maintain its bullish bias and edged lower on the day as rising expectations of a more aggressive rate cut in September grew after weaker US employment data in July raised fears of a looming recession.
The CME FedWatch tool shows a 67.5% probability of a 50-basis point interest rate cut by the Federal Reserve in September, up from 13.2% a week earlier.
According to Reuters, Federal Reserve Bank of San Francisco President Mary Daly noted that risks to the Fed's mandates are becoming more balanced, and there is openness to cutting rates in upcoming meetings.
Additionally, Chicago Fed President Austan Goolsbee stated that the central bank is prepared to act if economic or financial conditions worsen.
Therefore, the bearish US dollar sentiment helped the GBP/USD pair gain traction, rising above the 1.2719 level as traders reacted to the increasing likelihood of a US interest rate cut.
Dovish BoE Stance and Geopolitical Tensions Cap Gains in GBP/USD Pair
On the other hand, the Pound Sterling (GBP) faced challenges as the Bank of England (BoE) implemented a widely anticipated 25-basis point rate cut at its August meeting. Furthermore, market expectations now include the possibility of two further quarter-point rate cuts by the BoE by December.
Meanwhile, the concerns about escalating Middle East conflicts were heightened after Iran-backed Hezbollah launched dozens of missiles at Israel in response to the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike in Tehran.
Thus, the dovish BoE stance and escalating Middle East tensions limited gains in the GBP/USD pair, capping its upside potential.
GBP/USD - Technical Analysis
The GBP/USD pair is trading at $1.27022, reflecting a 0.20% increase in today’s session. Despite this uptick, the pair remains below the pivot point of $1.2736, indicating a cautious outlook as traders weigh recent economic data and broader market trends.
Immediate resistance is encountered at $1.2802, with further resistance at $1.2839 and $1.2889, levels that need to be breached for the pair to establish a more sustained upward trajectory.
On the downside, immediate support is located at $1.2680, followed by significant levels at $1.2635 and $1.2614.
The Relative Strength Index (RSI) is currently at 39, suggesting that the pair is nearing oversold conditions, though not yet at levels typically associated with a reversal.
The 50-day Exponential Moving Average (EMA) is positioned at $1.2801, further underlining the bearish sentiment as the current price remains below this technical indicator.
The prevailing sentiment suggests a bearish bias unless the GBP/USD can rise above the pivot point and sustain momentum past immediate resistance.
An entry point for a short position is advised at $1.27349, with a take-profit target of $1.26621 and a stop-loss set at $1.27862.
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EUR/USD Price Analysis – Aug 07, 2024
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD trades at $1.27022, below the pivot point of $1.2736, indicating caution.
- RSI at 39 suggests near-oversold conditions, hinting at potential further declines.
- Sell at $1.27349, target $1.26621; stop-loss set at $1.27862 for risk management.
The GBP/USD pair is trading at $1.27022, reflecting a 0.20% increase in today’s session. Despite this uptick, the pair remains below the pivot point of $1.2736, indicating a cautious outlook as traders weigh recent economic data and broader market trends.
Immediate resistance is encountered at $1.2802, with further resistance at $1.2839 and $1.2889, levels that need to be breached for the pair to establish a more sustained upward trajectory.
On the downside, immediate support is located at $1.2680, followed by significant levels at $1.2635 and $1.2614.
The Relative Strength Index (RSI) is currently at 39, suggesting that the pair is nearing oversold conditions, though not yet at levels typically associated with a reversal.
The 50-day Exponential Moving Average (EMA) is positioned at $1.2801, further underlining the bearish sentiment as the current price remains below this technical indicator.
The prevailing sentiment suggests a bearish bias unless the GBP/USD can rise above the pivot point and sustain momentum past immediate resistance.
An entry point for a short position is advised at $1.27349, with a take-profit target of $1.26621 and a stop-loss set at $1.27862.
GBP/USD - Trade Ideas
Entry Price – Sell Limit 1.27349
Take Profit – 1.26621
Stop Loss – 1.27862
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$728/ -$513
Profit & Loss Per Mini Lot = +$72/ -$51
GBP/USD Price Analysis – Aug 05, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair failed to gain traction and remained under pressure around the 1.2755 level even though the US dollar is losing its traction amid dovish sentiment surrounding the Fed’s policy stance.
The reason for its downward trend can be attributed to the Bank of England (BoE) delivering a broadly expected 25-basis point rate hike at its August meeting on Thursday. This undermined the GBP currency and contributed to the GBP/USD pair losses.
Looking ahead, traders will be watching the US ISM Services Purchasing Managers Index (PMI) closely.
The PMI, which is anticipated to rise to 51.0 in July from 48.8 in June, could have a significant impact on the market. A stronger-than-expected PMI might strengthen the USD and potentially cap gains in other assets.
US Dollar Weakness and Impact of Employment Data on GBP/USD Pair
On the US front, the US dollar struggled to gain traction and edged lower on the day due to the Federal Reserve's dovish stance and weak employment data.
Traders expect a 50-basis point rate cut in September and over 100 bps cuts this year, according to the CME FedWatch tool. This expectation arises from weak US economic data suggesting a slowdown and casting doubt on a "soft landing" for the economy.
Meanwhile, the labor market is deteriorating, and the manufacturing sector is slowing down sharply.
The July Nonfarm Payrolls report showed a drop in labor demand and a rise in unemployment to its highest since November 2021, increasing the likelihood of rate cuts.
On the data front, US Nonfarm Payrolls increased by 114,000 in July, falling short of the 175,000 expected and down from 179,000 in June. The unemployment rate rose to 4.3%, the highest since November 2021, and Average Hourly Earnings grew by just 0.2%, below the 0.3% forecast.
Therefore, the weak US employment data and rising unemployment rate have increased the possibility of rate cuts, putting pressure on the US dollar and impacting the GBP/USD pair, which remains under pressure.
Impact of BoE Rate Cut and Inflation Outlook on GBP/USD Pair
On the other side, the losses in the GBP/USD pair were mainly due to the Bank of England (BoE) implementing a widely expected 25-basis point rate cut at its August meeting. BoE Governor Andrew Bailey added that the increase in the minimum wage has not caused major concerns for the bank.
He also mentioned that the overall inflation trend, including some potential risks, is now closer to the 2% target.
This rate cut and the positive inflation outlook contributed to the GBP's weakness, as lower interest rates generally make a currency less attractive to investors. As a result, the GBP/USD pair faced downward pressure despite the US dollar's struggles.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27991, reflecting a slight decrease of 0.07% as market participants continue to assess the impact of recent economic data and geopolitical events.
The currency pair has been navigating a tight range, with traders closely watching key technical levels for potential breakout opportunities. The 4-hour chart shows that GBP/USD is trading just below its pivot point at $1.2802, suggesting a bearish bias in the short term.
Immediate resistance is identified at $1.2840, which could serve as a critical barrier for bullish momentum. If the pair breaks above this resistance, further upside potential may be capped at $1.2862 and $1.2890.
Conversely, immediate support is found at $1.2741, with subsequent support levels at $1.2711 and $1.2678. These support levels are essential for traders to monitor, as a breach below could signal further downside pressure.
The Relative Strength Index (RSI) is currently at 52, indicating a neutral stance that suggests neither overbought nor oversold conditions.
This neutrality implies that GBP/USD has room to move in either direction, depending on market catalysts. The 50-day Exponential Moving Average (EMA) is aligned with the pivot point at $1.2802, reinforcing its significance as a critical level for near-term price action.
Given the current technical landscape, traders might consider selling if GBP/USD remains below $1.28017, targeting a potential decline toward $1.27409. A stop-loss above $1.28438 is recommended to manage risk and protect against unexpected volatility.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD faces immediate resistance at $1.2840, with support at $1.2741.
- RSI at 52 suggests balanced momentum, allowing movement in either direction.
- The 50-day EMA at $1.2802 serves as a pivotal level for near-term trends.
The GBP/USD pair is currently trading at $1.27991, reflecting a slight decrease of 0.07% as market participants continue to assess the impact of recent economic data and geopolitical events.
The currency pair has been navigating a tight range, with traders closely watching key technical levels for potential breakout opportunities. The 4-hour chart shows that GBP/USD is trading just below its pivot point at $1.2802, suggesting a bearish bias in the short term.
Immediate resistance is identified at $1.2840, which could serve as a critical barrier for bullish momentum. If the pair breaks above this resistance, further upside potential may be capped at $1.2862 and $1.2890.
Conversely, immediate support is found at $1.2741, with subsequent support levels at $1.2711 and $1.2678. These support levels are essential for traders to monitor, as a breach below could signal further downside pressure.
The Relative Strength Index (RSI) is currently at 52, indicating a neutral stance that suggests neither overbought nor oversold conditions.
This neutrality implies that GBP/USD has room to move in either direction, depending on market catalysts. The 50-day Exponential Moving Average (EMA) is aligned with the pivot point at $1.2802, reinforcing its significance as a critical level for near-term price action.
Given the current technical landscape, traders might consider selling if GBP/USD remains below $1.28017, targeting a potential decline toward $1.27409. A stop-loss above $1.28438 is recommended to manage risk and protect against unexpected volatility.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.28017
Take Profit – 1.27409
Stop Loss – 1.28438
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$608/ -$421
Profit & Loss Per Mini Lot = +$60/ -$42
GBP/USD Price Analysis – July 31, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair failed to gain any strong bullish traction and remained subdued around the 1.2835 level, hitting an intra-day low of 1.2820. The subdued trend can be attributed to expectations that the BoE will reduce interest rates in its August meeting for the first time since March 2020.
This anticipation has undermined the GBP and contributed to the GBP/USD pair's losses. However, the bearish US dollar, pressured by expectations for the Fed to begin reducing interest rates, has helped limit the GBP/USD pair's losses.
GBP Weakens on BoE Rate Cut Expectations, but USD Outlook Limits Losses
On the BoE front, the British currency has fallen against most major peers as investors anticipate the BoE might cut interest rates in August for the first time since March 2020. The BoE has maintained a tight monetary policy since December 2021 to combat inflation driven by pandemic-related stimulus.
Market experts believe a 25 basis point cut is challenging, as policymakers are cautious due to high service sector inflation.
On the data front, the UK's annual service inflation reached 5.7% in June, exceeding the BoE’s forecast of 5.1% and doubling the level needed to justify rate cuts. Despite growing expectations for a rate cut, the BoE is unlikely to commit to a clear policy change due to strong wage growth momentum.
Therefore, the anticipated BoE rate cut has weakened the GBP against most major currencies, including the USD. Despite this, the GBP/USD pair's losses are limited by a bearish USD outlook.
GBP/USD Decline Despite USD Weakness and Anticipated Fed Rate Cut
Despite the weakness in the US dollar, the GBP/USD pair is falling, indicating strong selling pressure on the British currency.
The US Dollar Index (DXY), which measures the Greenback against six major currencies, has dropped 0.2% to 104.20 as investors await the Federal Reserve’s (Fed) monetary policy decision, scheduled for 18:00 GMT.
However, the Fed is expected to keep interest rates unchanged at 5.25%-5.50% for the eighth consecutive meeting since July 2023.
However, investors are closely monitoring for signals of future rate cuts. According to the CME FedWatch Tool, a 25 basis point rate cut in September is already anticipated, driven by improved inflation data and moderating labor market conditions.
Despite the weakness of the USD, the GBP/USD pair is declining due to significant selling pressure on the GBP. The anticipated Fed rate cut in September is further exacerbating the GBP’s challenges.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.28266, down 0.06% on the day. The 4-hour chart reveals a bearish trend, with the pair trading below the pivot point at $1.28448. Immediate resistance is located at $1.28885, followed by $1.29327 and $1.29865.
On the downside, immediate support is seen at $1.27819, with further support levels at $1.27566 and $1.27351.
Technical indicators support the bearish sentiment. The Relative Strength Index (RSI) is at 40, indicating that the pair is approaching oversold conditions but still has room for further declines.
The 50-day Exponential Moving Average (EMA) is at $1.28853, reinforcing the bearish outlook as long as the price remains below this level.
The recommended trade setup is a buy limit at $1.28190, with a take profit target at $1.28958 and a stop loss at $1.27792. This setup provides a balanced risk-to-reward ratio, allowing for potential gains while managing downside risk effectively.
The overall technical perspective for GBP/USD remains bearish below the pivot point at $1.28448. A move above immediate resistance at $1.28885 could indicate a shift towards a bullish trend, targeting higher resistance levels.
However, failure to hold above the immediate support at $1.27819 might lead to further declines, targeting the next support levels at $1.27566 and $1.27351.
In conclusion, the technical outlook for GBP/USD suggests continued bearish momentum below $1.28448.
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EUR/USD Price Analysis – July 31, 2024
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD trades at $1.28266, down 0.06%, showing bearish momentum on the 4-hour chart.
- Immediate resistance levels: $1.28885, $1.29327, $1.29865; support levels: $1.27819, $1.27566, $1.27351.
- RSI at 40, 50-day EMA at $1.28853, suggesting a buy limit at $1.28190, take profit at $1.28958, and stop loss at $1.27792.
GBP/USD is trading at $1.28266, down 0.06% on the day. The 4-hour chart reveals a bearish trend, with the pair trading below the pivot point at $1.28448. Immediate resistance is located at $1.28885, followed by $1.29327 and $1.29865.
On the downside, immediate support is seen at $1.27819, with further support levels at $1.27566 and $1.27351.
Technical indicators support the bearish sentiment. The Relative Strength Index (RSI) is at 40, indicating that the pair is approaching oversold conditions but still has room for further declines.
The 50-day Exponential Moving Average (EMA) is at $1.28853, reinforcing the bearish outlook as long as the price remains below this level.
The recommended trade setup is a buy limit at $1.28190, with a take profit target at $1.28958 and a stop loss at $1.27792. This setup provides a balanced risk-to-reward ratio, allowing for potential gains while managing downside risk effectively.
The overall technical perspective for GBP/USD remains bearish below the pivot point at $1.28448. A move above immediate resistance at $1.28885 could indicate a shift towards a bullish trend, targeting higher resistance levels.
However, failure to hold above the immediate support at $1.27819 might lead to further declines, targeting the next support levels at $1.27566 and $1.27351.
In conclusion, the technical outlook for GBP/USD suggests continued bearish momentum below $1.28448.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.28444
Take Profit – 1.27803
Stop Loss – 1.28882
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$641/ -$438
Profit & Loss Per Mini Lot = +$64/ -$43
GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot Point: $1.2852 marks critical level; watch for moves above or below.
- RSI Level: RSI at 31 indicates potential oversold conditions; monitor for reversal.
- 50-day EMA: Resistance at $1.2920 suggests bearish trend below this level.
GBP/USD is currently trading at $1.28171, up 0.07% on a 4-hour chart. The pivot point is set at $1.2852, marking a significant level to watch. Immediate resistance levels are $1.2889, $1.2933, and $1.2987. On the downside, immediate support is at $1.2782, followed by $1.2757 and $1.2735.
The Relative Strength Index (RSI) is at 31, indicating that the pair is nearing oversold conditions. This could suggest a potential reversal or a period of consolidation before any significant movement.
The 50-day Exponential Moving Average (EMA) stands at $1.2920, which provides a higher resistance level. If GBP/USD moves above this EMA, it could signal a stronger bullish trend. Conversely, staying below this EMA suggests continued bearish pressure.
Given the current technical indicators, the outlook for GBP/USD remains cautious. The RSI indicates potential oversold conditions, which may lead to a temporary bounce or consolidation. However, traders should be prepared for further downside if key support levels are breached.
For traders, a strategic approach would be to consider selling below the pivot point of $1.2852, with a target take profit level at $1.2782. To manage risk, a stop loss should be placed at $1.2889. This setup aims to capitalize on the prevailing bearish sentiment while acknowledging the possibility of a short-term reversal due to the oversold RSI.
In conclusion, GBP/USD is under bearish pressure, with key levels dictating its next moves.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.28451
Take Profit – 1.27810
Stop Loss – 1.28889
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$641/ -$438
Profit & Loss Per Mini Lot = +$64/ -$43
GBP/USD Price Analysis – July 29, 2024
Daily Price Outlook
Despite the bearish US dollar and expectations of a September Fed rate cut, the GBP/USD currency pair failed to stop its losing streak and remained well offered around the 1.2839 level, hitting an intra-day low of 1.2807.
The downward trend can be attributed to the expectation that the Bank of England (BoE) will cut its interest rates by 25 basis points (bps) to 5%. This expectation undermined the GBP currency and contributed to the GBP/USD pair's losses.
Additionally, renewed strength in the US dollar, supported by uncertainty ahead of the Federal Reserve’s (Fed) monetary policy announcement, was another key factor putting pressure on the GBP/USD currency pair.
Looking ahead, traders are likely to remain cautious as they await the results of the two-day Federal Open Market Committee (FOMC) meeting, which concludes on Wednesday. This meeting, along with key US macroeconomic data, including the Nonfarm Payrolls (NFP) report at the start of the month, could provide new direction for the commodity.
BoE Rate Cut Anticipation and Service Sector Inflation Likely to Weaken GBP/USD
On the BoE front, the British currency weakens as the Bank of England prepares for its monetary policy meeting on Thursday. The BoE is expected to cut interest rates by 25 basis points to 5%, marking its first rate cut in over four years.
This decision comes after central banks shifted to restrictive policies to address inflated markets during the pandemic. Despite annual headline inflation returning to the target rate of 2%, high inflation in the service sector remains a concern.
Market experts worry that this rate cut might be challenging due to persistent service sector inflation.
Additionally, UK Prime Minister Keir Starmer's absolute majority has improved the economic outlook, with anticipated growth in manufacturing and services possibly leading to higher input prices. This could reignite price pressures and impact the currency further.
Therefore, the BoE's anticipated rate cut and persistent service sector inflation could weaken GBP/USD. Despite a positive economic outlook under Starmer, higher input prices may renew price pressures on the currency.
US Dollar Strength and Fed Rate Decision Pressure GBP/USD to Two-Week Low
On the US front, the broad-based US dollar regained traction and edged higher, pushing the Pound Sterling to a two-week low near 1.2810 against the US Dollar (USD). This comes as the market awaits the Federal Reserve's (Fed) monetary policy announcement on Wednesday.
The US Dollar Index (DXY) rose to 104.50 as investors brace for the Fed to maintain interest rates unchanged at 5.25%-5.50% for the eighth consecutive time.
Market watchers will closely examine Fed Chair Jerome Powell's statement and press conference for hints on potential rate cuts, as the Fed might acknowledge progress in reducing inflation and rising labor market risks.
Additionally, upcoming US economic data, including JOLTS Job Openings, ADP Employment Change, ISM Manufacturing PMI, and July’s Nonfarm Payrolls, will be scrutinized for further insights.
Therefore, the strengthening US dollar and the Federal Reserve's expected rate hold are pressuring the GBP/USD pair, pushing it to a two-week low as market participants anticipate future rate cuts.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.28171, up 0.07% on a 4-hour chart. The pivot point is set at $1.2852, marking a significant level to watch. Immediate resistance levels are $1.2889, $1.2933, and $1.2987. On the downside, immediate support is at $1.2782, followed by $1.2757 and $1.2735.
The Relative Strength Index (RSI) is at 31, indicating that the pair is nearing oversold conditions. This could suggest a potential reversal or a period of consolidation before any significant movement.
The 50-day Exponential Moving Average (EMA) stands at $1.2920, which provides a higher resistance level. If GBP/USD moves above this EMA, it could signal a stronger bullish trend. Conversely, staying below this EMA suggests continued bearish pressure.
Given the current technical indicators, the outlook for GBP/USD remains cautious. The RSI indicates potential oversold conditions, which may lead to a temporary bounce or consolidation. However, traders should be prepared for further downside if key support levels are breached.
For traders, a strategic approach would be to consider selling below the pivot point of $1.2852, with a target take profit level at $1.2782. To manage risk, a stop loss should be placed at $1.2889. This setup aims to capitalize on the prevailing bearish sentiment while acknowledging the possibility of a short-term reversal due to the oversold RSI.
In conclusion, GBP/USD is under bearish pressure, with key levels dictating its next moves.
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