- GBP outlook stays pressured as investors turn to the US dollar for its safe-haven appeal.
- Traders look forward to BoE’s Huw Pill’s speech and FOMC minutes to gauge direction.
- Technically, the pair signals a bearish trend and trades around 1.3400.
The GBP/USD outlook shows bearish bias, trading around 1.3400 since investors have fled to the US dollar amid the rising safe-haven demand.
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The US DXY has gained 0.35%, soaring to 99.0, marking a two-month high amid heightened global instability. With the election of Japan’s ruling party’s Sinae Takaichi as their new leader and the resignation of French PM Sebastian Lecornu, the traditional safe-haven status of the dollar has been restored.
On the domestic front, the current US government shutdown, now in its second week, poses a threat to the dollar’s recovery. The market stays cautious as Donald Trump warns of further welfare cuts and federal layoffs. Despite this, the USD stays steady as investors anticipate the shutdown lift. Traders are closely observing the federal rate cuts and FOMC minutes releases for clear policy direction.
On the UK side, the pound stays pressured as investors await BoE’s chief economist Huw Pill’s speech today. The speech is expected to highlight the central bank’s monetary outlook. The BoE holds its cautious easing stance due to rising inflation and economic slowdown, after holding rates steady at 4.0% in September.
The sterling holds bearish due to the possibility of further rate cuts this year. Overall, the GBP/USD pair shows a downtrend, with the US dollar gaining strength while the pound looks for support from the UK’s cautious monetary policy and Fed easing.
GBP/USD Key Events Ahead
- FOMC Minutes
- Fed’s Kashkari speech
Today, the traders are anticipating the FOMC Minutes and Fed’s Kashkari speech. Both events are important as markets will assess the central bank’s stance regarding the growth slowdown due to the shutdown.
GBP/USD Technical Outlook: Mildly Supported Around 1.3400
The GBP/USD 4-hour chart indicates bears gaining traction as the price lies below the 50-, 100-, and 200-period moving averages. This confirms a declining structure. The recent rejection close to the 50-MA signals that while sellers defend higher levels, the pair still fails to maintain the 1.3440-1.3460 zone, confirming the downtrend.
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The RSI currently holds near 42, which implies bearish movement, but it is not yet oversold, and the room for more downside persists. On breaking below 1.3370, it could move towards 1.3320. However, to turn the short-term bias in a neutral direction, the pair needs to reclaim 1.3450, which is a key resistance zone.
The overall sentiment indicates a negative outlook. The pair is likely to stay under pressure until bullish momentum picks up and the buyers reclaim control over the 50-MA.
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