- The pound sterling remains weak amid expectations of a rate cut by the BoE.
- The dollar maintains stability and its safe-haven appeal amid sticky inflation.
- Traders look forward to remarks by FOMC members Bowman and Barr for further policy direction.
The GBP/USD forecast reflects a mixed scenario on Thursday, with the pound under pressure by easing expectations of the Bank of England’s pivot. At the same time, the US dollar remains stable amid renewed safe-haven appeal. The pair trades near 1.3350, consolidating after waning inflation and growth momentum in the UK.
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The recently released CPI report revealed that inflation stood at 3.8%, below the forecast of 4.0%. Meanwhile, the core inflation reduced from 3.6% to 3.5% in August. This reaffirms expectations of the BoE easing in the remainder of the year. A 25 basis point rate cut to 3.75% is likely before year-end. This move suggests growing confidence in policy shifts.
The dollar holds firm in the US as investors expect two additional Federal rate cuts despite high inflation. Additionally, the US CPI is expected to rise by 3.1% YoY. Meanwhile, the core prices are expected to increase by 3.1%. If this follows, the inflation will likely stay above the Fed’s 2% mark. Keeping the sticky inflation in view, the subdued economic momentum and risk aversion support the dollar’s strength.
GBP/USD Daily Key Events
The significant events in the day include
- CBI Industrial Order Expectations
- Existing Home Sales
- FOMC Member Bowman Speaks
- FOMC Member Barr Speaks
On Thursday, the traders await the speeches by FOMC members Bowman and Barr to get insights about further economic and policy cues.
GBP/USD Technical Forecast: Struggling Around 1.3350
The GBP/USD 4-hour chart reflects a bearish momentum as the pair attempts to stay above the 1.3350 level. The price remains below the key moving averages, indicating a continued downtrend.
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The RSI is at 42, after a slight recovery from oversold conditions. A decisive break above the 1.3400 level could extend gains towards the upside. Meanwhile, dropping below the 1.3400 level could lead to renewed downside pressure.
Support Levels
- 1.3330 (Immediate support)
- 1.3305 (Recent swing low)
- 1.3250 (Monthly low)
Resistance Levels
- 1.3380 (20-MA)
- 1.3460 (100-MA)
- 1.3475 (200-MA)
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