- Traders are still digesting last week’s events
- BoE Governor Andrew Bailey said the central bank might pivot to aggressive cuts.
- The US NFP report revealed an unexpected 254,000 new jobs in September.
The GBP/USD forecast shows a period of consolidation after the recent slide to new lows. The pound remained weak after dovish BoE remarks last week. On the other hand, the dollar paused, holding on to gains made after an upbeat US NFP report.
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Market participants were calm on Wednesday as prices paused in a slow start to the week. Consequently, traders were still digesting last week’s events, which pressured the pound and boosted the dollar.
Last week, economic data and policymaker remarks pointed to an aggressive BoE and a gradual Fed. Bank of England Governor Andrew Bailey said the central bank might pivot to aggressive cuts depending on future inflation figures.
Meanwhile, most US economic reports last week showed a resilient economy. The biggest catalyst came on Friday when the NFP report revealed an unexpected 254,000 new jobs in September. Moreover, the unemployment rate eased to 4.1%. Consequently, market participants slashed bets for a November rate cut, with futures suggesting a 25-bps rate cut. The dollar rallied to a seven-week high, weighing on its peers like the pound.
This week, the UK and the US will release more economic data that will continue shaping the outlook for rate cuts. Notably, traders will watch the UK GDP report on Friday, highlighting growth. Weaker-than-expected growth could put more pressure on the BoE to cut rates. Meanwhile, in the US, the FOMC minutes and the CPI report might contain clues on the Fed’s next policy moves.
GBP/USD key events today
GBP/USD technical forecast: Bears show exhaustion after sharp decline
On the technical side, the GBP/USD price is in a tight consolidation, slightly above the 1.3051 support level. Meanwhile, the bearish bias remains intact, with the price below the SMA and the RSI below 50. After a sharp drop, the price has paused.
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However, the RSI is making higher highs, indicating exhaustion in the downtrend. If bears have weakened, they might fail to breach the 1.3051 support. Moreover, bulls might reverse the trend by breaking above the SMA. Nevertheless, if bears are taking a short break, the price might soon start making lower lows.
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