GBP/USD appears to be finding stability after recent declines driven by the US election outcome and ongoing shifts in central bank policy. The Bank of England’s hawkish rate cut has helped to support the currency pair, while the Federal Reserve’s anticipated policy adjustments may continue to influence its direction.
As of Friday, GBP/USD traded just below 1.30, with the US Dollar attempting to regain ground following a sharp correction on Thursday. The DXY remains in a narrow range around 104.50. Earlier in the week, GBP/USD had dipped amid a surge in the US Dollar following the election.
Bank of England’s Outlook Supports GBP/USD
The Bank of England’s recent 25 basis point rate cut to 4.75% signaled a cautious approach, with Governor Bailey suggesting that rates may gradually decline if economic conditions align with the central bank’s forecasts.
However, he emphasized that policy would remain restrictive until inflation risks ease, offering some underlying support for GBP/USD.
The Federal Reserve also reduced rates by 25 basis points, with projections pointing to a year-end target of 4.5% for the federal funds rate. The Fed’s potential shift towards easing restrictions may provide additional support for GBP/USD, as the central bank appears to be moving more quickly than the BoE in its policy adjustments.
However, upcoming statements from Fed Chair Jerome Powell and other FOMC members could strengthen the US Dollar if they suggest a firm stance on future rate policies.
Key Economic Data to Watch
GBP/USD may experience volatility in the coming week with several critical economic releases from both the UK and the US.
- UK Jobs data on 12/11
- US CPI on 13/11
- UK GDP and US PPI on 14/11
- US Retail Sales on 15/11
GBP/USD appears to have found temporary support after reaching a recent low at 1.287. The pair is attempting to rebound, though bearish pressure remains in place.
Technical Analysis
- The price is consolidating below the pivot line, with the 100 EMA situated above, indicating sustained selling interest.
- For GBP/USD to regain bullish momentum, it would need to break above the 1.30 – 1.31 pivot range.
- Conversely, a drop below the 1.29 level could introduce further downward momentum, potentially marking a shift toward a more bearish trend.
With major data releases on the horizon, GBP/USD may see substantial movement as traders respond to central bank cues and economic indicators.
