- The GBP/USD weekly forecast remains slightly subdued as the markets pared partial weekly gains amid dollar recovery and profit-taking.
- Fed’s data dependency and resilient UK economy continue to balance the GBP/USD.
- Market participants eye the US NFP and the BoE interest rate decision to gauge further directional bias.
The GBP/USD price closed its second consecutive week in gains as markets anticipated a cautious Bank of England following resilient UK economic data. Meanwhile, the US dollar slipped to four-year lows amid concerns about geopolitics and the Fed’s independence before finding a mild footing.
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The pair marked fresh highs since October 2021 near 1.3860 before correcting down below mid-1.3700. The downtick triggered on Thursday and Friday was attributed to the deal struck between President Trump and the US Senate to avoid a US government shutdown. Moreover, Trump nominated Kevin Warsh as the next Chair of the Federal Reserve, which further weakened the dollar.
On the data front, the UK economic calendar was light with no major releases, while the US FOMC meeting was the highlight of the week. As broadly expected, the central bank held rates unchanged, while Fed Chair Powell’s press conference brought no clarity to the markets, reiterating a data-dependent approach.
The US PPI data on Friday beat the forecast with monthly Core PPI and PPI coming at 0.7% and 0.5%, respectively. This shows a sticky inflation, further cementing the odds of late cuts.
Meanwhile, geopolitical developments surrounding Iran and the Russia-Ukraine conflict continue to deteriorate the risk sentiment, making the upside path for GBP/USD bumpy.
GBP/USD Major Events Next Week:
Moving ahead, the following major events could significantly impact the pair’s volatility:
- Bank of England Policy Rate and Statement
- US ISM Manufacturing/Services PMI
- JOLTs Job Openings
- ADP Non-Farm Employment Change
- Average Hourly Earnings m/m
- Unemployment Rate
- Prelim Uom Consumer Sentiment
- Prelim Uom Inflation Expectations
With several high-impact events on the list, market participants will be keen to watch the BoE’s policy rate, which is widely expected to remain on hold. However, the MPC vote split could be decisive in gauging sentiment regarding the next rate cut.
On the other hand, the US labor market data remains a vital factor for the Fed to shape up its monetary policy. The NFP numbers are expected to jump from 50k to 75k, while the unemployment rate could remain at 4.4%. Any significant deviation from these forecasts could trigger a sharp move.
GBP/USD Weekly Technical Forecast: Correction Amid Profit-Taking
The GBP/USD daily chart shows a corrective downside after briefly breaking the supply zone above 1.3850. The pair lost more than 100 pips, with the RSI retreating below 50.0, suggesting further losses on the card. However, the 1.3700 level could pause the downside ahead of the next support at 1.3600 (round number) and then supply-tuned demand zone near 1.3500.
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On the upside, the key resistance lies at 1.3800, ahead of the monthly top at 1.3860, and then at 1.3925. The odds of testing 1.4000 are thin for now, as profit-taking has put pressure on the pair. However, the pair could gather buying traction around the major support zones to rally to fresh highs as the broad upside trend remains intact while staying well above the key MAs.
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