- The GBP/USD outlook shows a rally in the pound as traders await key policy decisions.
- The dollar fell last week after data revealed an unexpected jump in unemployment claims.
- The Bank of England has grown more cautious amid high inflation.
The GBP/USD outlook shows a rally in the pound as traders await policy decisions in the US and the UK. After downbeat employment figures, the Fed is set to cut rates by 25-bps. Meanwhile, the Bank of England will likely keep interest rates unchanged.
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The dollar fell last week after data revealed an unexpected jump in unemployment claims. It was the last nail in the coffin that pointed to a deteriorating labor market in need of support. Meanwhile, inflation was slightly hotter-than-expected. Nevertheless, it was not enough to dampen Fed rate cut expectations.
This week, traders will wait to see the tone during the meeting to determine future policy moves. If policymakers are more dovish than expected, the dollar will collapse. Meanwhile, if they remain relatively cautious about rate cuts, the US currency could recover.
On the other hand, the Bank of England has grown more cautious amid high inflation. As a result, traders expect policymakers to keep interest rates unchanged. This is giving the pound an edge over most of its peers, especially the dollar. However, there is uncertainty about the UK’s financial health. Market participants are keeping an eye on the upcoming November budget for clues on the country’s financial outlook.
GBP/USD key events today
Traders are not anticipating any high-impact economic releases today. Therefore, they will keep an eye on upcoming central bank meetings.
GBP/USD technical outlook: Bulls intensify above 1.3575
On the technical side, the GBP/USD price is on the verge of closing above the 1.3575 key resistance level. Such an outcome would make a higher high, confirming a continuation of the previous uptrend. Moreover, the price trades above the 30-SMA, with the RSI nearing the overbought region, suggesting solid bullish momentum.
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Initially, the price was trading in a bullish trend before pausing near the 1.3575 resistance level. After this, I entered a corrective phase where it was chopping through the 30-SMA. However, the corrective move found support near the 1.3350 level. Afterwards, bulls took charge, pushing the price above the 30-SMA and respecting it as a support.
The break above the 1.3575 level shows that bulls are ready to resume the previous uptrend. Therefore, GBP/USD could soon retest higher resistance levels.
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