CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• GBP/USD trades with mild gains to around 1.3130 in Monday’s Asian session. 
• The encouraging Nonfarm Payrolls could help limit the USD’s losses. 
• The dovish stance of the BoE might undermine the US Dollar. 

The GBP/USD pair posts modest gains to near 1.3130, snapping the three-day losing streak during the early Asian session on Monday. However, the upside of the major pair might be limited amid the reduced bets of the Federal Reserve interest rate cuts after the upbeat US Nonfarm Payrolls (NFP) on Friday. 

The Fed lowered its cutting cycle by 50 basis points (bps) in September but stronger-than-expected reduced the odds that the larger than “normal” cut will be repeated. According to the CME Fedwatch Tool, financial markets are now pricing in nearly 97.4% chance of 50 basis points (bps) Fed rate cuts in September, up from 31.1% before the NFP data. 

The NFP report showed the US economy adding 254K jobs in September versus 159K prior, better than estimations. The Average Hourly Earnings climbed to 3.8% from 3.6% during the same period. Finally, the Unemployment Rate ticks lower to 4.1% in September from 4.2% in August. 

The Pound Sterling (GBP) edges higher after the Bank of England (BoE) could take a more aggressive approach to lowering interest rates. Meanwhile, the BoEChief Economist Huw Pil stated that the UK central bank should move only gradually by cutting interest rates. Financial markets are more divided about whether the BoE will follow a rate cut in November with another in December. The BoE has not cut rates at consecutive meetings since 2020.

The Pound Sterling (GBP) fell after BoE Governor Bailey unexpectedly spoke about adopting a more aggressive easing stance. Pair was last at 1.3165 levels., OCBC’s FX analysts Frances Cheung and Christopher Wong note.  

BoE can become a ‘bit more aggressive’

“In an interview with the Guardian, he said that the BoE could become a ‘bit more aggressive’ and ‘a bit more activist’ in its approach to cutting rates if the news on inflation continued to be good.”

“This is a flip from the last MPC in Sep where policymakers emphasized the need for policy to stay restrictive for ‘sufficiently long’ and that most members saw the need for gradual approach to removing restraint. A catch-up in dovish re-pricing should continue to dampen GBP bulls until the next MPC.”

“Daily momentum turned bearish while RSI fell. Tactical bias switches to sell on rallies for now. Resistance at 1.3230 (21 DMA), 1.3430 levels. Support at 1.3080 (50 DMA), 1.30 levels.”

Weakness has not stabilized. The Pound Sterling (GBP) could dip to 1.3080 before stabilisation can be expected. In the longer run, price action suggests further GBP weakness; the next major support at 1.3000 may not come into view so soon, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

The next major support is at 1.3000

24-HOUR VIEW: “While we expected GBP to weaken yesterday, we were of the view that ‘the major support 1.3210 level is unlikely to come under threat.’ However, GBP not only broke below 1.3210 but also plunged further, reaching a low of 1.3093. Not surprisingly, after such an outsized decline, conditions are severely oversold, but given that the weakness has not stabilised, GBP could dip to 1.3080 before stabilisation can be expected. The major support at 1.3000 is not expected to come into view. Resistance levels are at 1.3160 and 1.3200.”

1-3 WEEKS VIEW: “Our most recent narrative was from Wednesday (02 Oct, spot at 1.3275), wherein for GBP to continue to weaken, it ‘has to break the major support at 1.3210.’ We highlighted that ‘the chance of GBP breaking clearly below 1.3210 appears to be on the high side, provided that it remains below 1.3355.’ Yesterday, GBP broke below 1.3210, plunging to 1.3093. GBP closed lower by a whopping 1.05% (1.3127), its second largest 1-day drop this year. Although the price action suggests further weakness, short-term conditions are severely oversold, and the next major support at 1.3000 may not come into so soon. The downside risk will remain intact provided that GBP does not break above 1.3255 (‘strong resistance’ level previously at 1.3355).”

• GBP/USD holds steady around 1.3125 in Friday’s Asian session. 
• Less dovish Fed and geopolitical risks might support the USD in the near term. 
• The BoE said it could move more aggressively to cut rates if inflation pressures continued to ease. 

The GBP/USD pair struggles to gain ground near 1.3125 during the Asian session on Friday. Traders prefer to wait on the sidelines ahead of the US employment data, including Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings, which are due later on Friday. 

Shifting expectations for the US Federal Reserve’s (Fed) next move might lift the US Dollar (USD) against the Pound Sterling (GBP) in the near term. The US employment data might offer some hints about the size of the November Fed rate cut. Analysts estimated a 140k increase in the NFP report, while the Unemployment Rate and the Average Hourly Earnings growth remain steady at 4.2% and 3.8%, respectively. An upside surprise outcome could dampen the hope for a 50 basis point (bps) rate reduction in the November meeting. 

The rising Middle East tensions could boost the safe haven flows and benefit the Greenback. CNN reported on Thursday that an attack in central Beirut killed nine people, marking Israel's first strike in the region since 2006. The Israeli military vows to continue targeting Hezbollah in Beirut and southern Lebanon, after more airstrikes in the capital on Thursday.

On the GBP’s front, the dovish comments by Bank of England (BoE) Governor Andrew Bailey on Thursday might undermine the GBP. Bailey said the prospect of the BoE becoming a “bit more aggressive” in cutting interest rates as the development of inflation continued to be good. The BoE is widely expected to cut the policy rate by 25 bps at the November meeting, and the odds of the December meeting increased.

• GBP/USD trades on a firmer note around 1.3125 in Friday’s early Asian session. 
• The US Nonfarm Payrolls (NFP) data will be in the spotlight on Friday. 
• BoE’s Bailey said he sees a chance of a more aggressive rate reduction. 

The GBP/USD pair posts modest gains to near 1.3125, snapping the three-day losing streak during the early Asian session on Friday. However, the upside for the major pair might be limited as traders brace for the highly-anticipated US Nonfarm Payrolls (NFP) data, which is due later on Friday. 

Federal Reserve (Fed) Chair Jerome Powell said earlier this week that the recent half-percentage point interest rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive. Powell further stated that if the economic data remains consistent, there are likely two more rate cuts coming this year, but they will be smaller. The reduced bets of jumbo Fed rate cuts might underpin the Greenback in the near term. 

The encouraging US economic data on Thursday supports the USD. Data released by the Institute for Supply Management (ISM) showed that the US Services Purchasing Managers Index (PMI) rose to 54.9 in September versus 51.5 prior. This figure came in above the market consensus of 51.7. 

The Pound Sterling (GBP) edged lower to the two-week lows on Thursday after Bank of England (BoE) Governor Andrew Bailey’s speech. Bailey noted that the UK central bank could take a more aggressive approach to lowering interest rates as inflation stayed subdued. The remarks from Bailey have triggered the expectation of a quarter-point cut in November and a solid chance of a consecutive reduction in December.  

• GBP/USD comes under intense selling pressure in reaction to Bailey’s dovish remarks.
• Bailey hints at more aggressive rate cuts and weighs heavily on GBP amid a bullish USD.
• Reduced bets for a 50 bps Fed rate cut in November and geopolitical risks benefit the buck.

The GBP/USD pair continues losing ground for the third straight day – also marking the fourth day of a negative move in the previous four – and plummets to over a two-week low during the first half of the European session on Thursday. Spot prices currently trade below mid-1.3100s, down nearly 1.0% for the day, and seem vulnerable to decline further in the wake of Bank of England (BoE) Governor Andrew Bailey's dovish remarks. 

In an interview with the Guardian newspaper published this Thursday, Bailey said that there was a chance that the BoE could become a bit more aggressive in cutting rates if there's further good news on inflation. The markets were quick to react and are now pricing in a 90% chance of a 25 basis points interest cut at the next BoE meeting in November. This, in turn, weighs heavily on the British Pound (GBP), which, along with sustained US Dollar (USD) buying, contributes to the GBP/USD pair's steep intraday fall. 

The incoming US data pointed to a still resilient labor market and forced investors to scale back their expectations for a more aggressive policy easing by the Federal Reserve (Fed). This, along with geopolitical risks stemming from the ongoing conflicts in the Middle East, assists the safe-haven USD to prolong this week's recovery from its lowest level since July 2023. The USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to a three-week top and exerts additional pressure on the GBP/USD pair. 

With the latest leg down, spot prices now seem to have confirmed a breakdown below the 61.8% Fibonacci retracement level of the recent rally from the 1.3000 psychological mark, or the September monthly swing low. Furthermore, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the GBP/USD pair is to the downside. Traders now look to the US economic docket – featuring Weekly Jobless Claims and the ISM Services PMI – for short-term opportunities.

• GBP/USD depreciates due to risk aversion amid rising geopolitical tensions in the Middle East.
• The US Dollar receives support as Treasury yields continue to gain ground.
• The BoE advocates a cautious approach to reducing rates, considering the persistently high inflation in the services sector.

GBP/USD extends its losing streak for the third consecutive day, trading around 1.3200 during the Asian session on Thursday. The risk-sensitive GBP/USD pair receives downward pressure due to the safe-haven flows amid escalating Middle-East tensions.

The Israeli Broadcasting Authority (IBA) reported that Israel's security cabinet has decided to issue a strong response to the recent Iranian attack. On Tuesday night, Iran launched over 200 ballistic missiles and drone strikes on Israel.

The improved US Treasury yields are supporting the US Dollar and undermining the GBP/USD pair. The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, continues to gain ground for the fourth successive session. The DXY trades around 101.80 with 2-year and 10-year yields on US bonds standing at 3.65% and 3.79%, respectively, at the time of writing.

On the data front, the ADP US Employment Change reported an increase of 143,000 jobs in September, exceeding the anticipated 120,000 jobs. Furthermore, annual pay increased by 4.7% year-over-year. The total number of jobs added in August was revised upward from 99,000 to 103,000.

The Bank of England (BoE) has been advocating a cautious approach to reducing interest rates, considering the still-high inflation in the services sector and relatively robust economic growth. In its quarterly statement released on Wednesday, the BoE's Financial Policy Committee (FPC) noted that “risks to UK financial stability are broadly unchanged since June.”

BoE policymaker Megan Greene warned that a consumption-driven recovery in the United Kingdom (UK) could trigger a new wave of inflation. However, Greene noted that further interest rate cuts are likely, as prices are "moving in the right direction."

• GBP/USD weakens to near 1.3265 in Thursday’s early Asian session. 
• The risk-off mood and upbeat US ADP report lift the US Dollar. 
• A less dovish stance of the BoE might cap the pair’s downside. 

The GBP/USD pair extends its downside to around 1.3265 during the early Asian session on Thursday. The renewed demand for the US dollar (USD) amid the rising geopolitical tensions in the Middle East provides some support to the major pair. The US September ISM Services Purchasing Managers Index (PMI), the weekly Initial Jobless Claims, and the final S&P Global Services PMI will be in the spotlight on Thursday. 

Iran fired more than 180 missiles at Israel on Tuesday, its biggest-ever direct attack on the country. Israel and the United States vowed retribution for the attack. A sign that conflict in the region is intensifying and the fear of wider war boosts the safe-haven flows, benefiting the Greenback against the Pound Sterling (GBP). 

The US ADP Employment Change data for September was better than expectations, with 143,000 new jobs added. This figure was above the median forecast of 120,000 and the revised August figure of 103,000. The attention will shift to the US employment data on Friday for fresh catalysts. 

The expectation that the easing cycle of the Bank of England (BoE) will be lower than other central banks from Group of Seven (G-7) nations might cap the downside for the GBP. The financial market expects the BoE to cut interest rates one more time by 25 bps in the remainder of this year.

• GBP/USD stalls after Tuesday’s drop which was caused by a surge in safe-haven demand for the US Dollar 
• Iran stoked Middle Eastern tensions with a mass missile strike on Tel Aviv. 
• Continued diverging outlook on monetary policy may put a floor under GBP/USD’s losses.

GBP/USD stalls and seesaws between tepid gains and losses in the 1.3280s on Wednesday after falling a whole cent on the previous day, when the US Dollar (USD) strengthened as a result of a rise in safe-haven flows due to an escalation of the conflict in the Middle East. 

Despite recent losses, the GBP/USD is in an overall uptrend, which has seen it gain almost 5.0% from the early August lows. 

Night skies were set alight on Tuesday evening after Iran fired around 200 missiles, many of which were ballistic at the Israeli capital Tel Aviv, in retaliation for the killing of the Hezbollah leader Hassan Nasrallah.The situation remains tense after Israeli Prime Minister Benjamin Netanyahu vowed Israel would avenge the attack, and that Iran had “made a big mistake”. 

The New York Times also reported that Israel is committing more troops to its bloody ground offensive in Lebanon, and with tensions running high, the Dollar is likely to see continued support from investors seeking safety. This, in turn, is likely to cap any gains for GBP/USD. 

The pair had been in a steady uptrend since early August because of the divergent outlook for monetary policy in the UK and the US. In the UK, the Bank of England (BoE) decided to leave interest rates unchanged at its policy meeting in September whilst in the US the Federal Reserve (Fed) slashed interest rates by a double-dose 50 bps at its meeting. Lower interest rates are generally negative for a currency – in this case the Dollar – as they reduce capital inflows.

The BoE has been advocating a cautious, “steady-as-she-goes” approach to reducing interest rates amid still-high services sector inflation and relatively robust growth. In the US, conversely  fears about a hard-landing and weak labor market briefly caused market-based bets to soar to 60% that the Fed would follow up with another 50 bps cut at their November meeting. 

Although these bets have since eased after US data reassured investors about the state of the economy, investors remain tense as they await a key piece of data regarding the labor market, in the form of US NonFarm Payrolls data for September, out on Friday. 

Despite oversold conditions, the Pound Sterling (GBP) could decline further; the likelihood of it reaching 1.3210 today is not high. In the longer run, to continue to weaken, GBP has to break the major support at 1.3210, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP has to break below 1.3210 to continue falling

24-HOUR VIEW: “We did anticipate the sharp drop in GBP that sent it plummeting to a low of 1.3237. GBP then closed on a weak note at 1.3287, down by 0.67%. The sharp drop is severely oversold, but further decline is not ruled out. However, given the oversold conditions, the likelihood of GBP reaching the major support at 1.3210 today is not high (there is another support at 1.3235). On the upside, any rebound is likely to remain below 1.3330 with minor resistance at 1.3300.”

1-3 WEEKS VIEW: “Yesterday (01 Oct, spot at 1.3375), we indicated that “the current price movements are likely part of a range trading phase, probably between 1.3300 and 1.3430.” We certainly did not anticipate the sharp drop that sent GBP to a low of 1.3237. While the increase in momentum suggests GBP is likely to continue to weaken, it has to break the major support at 1.3210 before further sustained decline is likely. The chance of GBP breaking clearly below 1.3210 appears to be on the high side, provided that it remains below 1.3355.”

• GBP/USD faces challenges due to rising risk-aversion sentiment amid escalating Middle-East conflict.
• Iran launched over 200 ballistic missiles at Israel and warned that any counterstrike would lead to "vast destruction."
• BoE’s Greene indicated that additional interest rate cuts are likely since prices are "moving in the right direction."

GBP/USD remains tepid following the losses registered in the previous session, trading around 1.3280 during the Asian hours on Wednesday. This downside could be attributed to the risk aversion due to the rising geopolitical tensions in the Middle East, which undermines the risk-sensitive Pound Sterling (GBP) and GBP/USD pair.

Iran launched over 200 ballistic missiles at Israel on Tuesday, shortly after the US had warned that a strike was imminent. The Israel Defense Forces reported that several of the missiles were intercepted, while reports indicated that one person was killed in the West Bank, according to Bloomberg.

Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran following a missile attack on Tuesday. In response, Tehran warned that any counterstrike would lead to "vast destruction," raising concerns about the potential for a broader conflict.

The US Dollar (USD) receives support from the latest speech by the Federal Reserve (Fed) Chairman Jerome Powell. Powell said that the central bank will lower its interest rate gradually over time. Fed Chair Powell added that the recent half-point interest rate cut should not be seen as an indication of similarly aggressive future actions, noting that upcoming rate changes are likely to be more modest.

On Tuesday, Bank of England (BoE) policymaker Megan Greene warned that a consumption-driven recovery in the United Kingdom (UK) could trigger a new wave of inflation. However, Greene noted that further interest rate cuts are likely as prices are "moving in the right direction," according to Bloomberg.

BoE policymaker Greene also stated that she believed the neutral interest rate had increased since the inflation shock. While most estimates suggest that the neutral rate for the Bank of England is around 3.5%, Greene did not provide a specific figure. The neutral rate refers to the level at which a central bank's policy neither stimulates nor constrains economic growth.

Traders are expected to pay close attention to the upcoming US ADP Employment Change report and comments from Federal Reserve officials on Wednesday for additional guidance on Wednesday. On the UK’s dock, the Bank of England’s Monetary Policy Report Hearings will be closely monitored on Thursday.

• GBP/USD fell back below 1.3300 on Tuesday as risk-off flows bubble over.
• Reports of Iranian missile strikes on Israel have bolstered fears of further geopolitical conflict.
• US data ahead of Friday’s NFP labor roundup did little to inspire investor confidence.

GBP/USD took a tumble on Tuesday, backsliding to its lowest bids in over a week after US ISM Purchasing Managers Index (PMI) figures misfired and broadly missed forecasts. Geopolitical tensions took center stage during the US market session, further plunging risk appetite lower following reports that Iran has fired on Israel in a clear escalation of ongoing Middle East tensions.

The economic calendar remains relatively free and clear on the Pound Sterling side, with GBP traders forced to wait until the Bank of England’s (BoE) Monetary Policy Report Hearings, due early Thursday. On the US side of things, a trickle of meaningful-in-the-aggregate yet individually meaningless economic data litters the landscape on the road to Friday’s Nonfarm Payrolls (NFP), and investors are grappling with middling releases that are routinely missing the mark.

Forex Today: The US labour market will be in the spotlight along with Fed speakers

September’s US ISM Manufacturing PMI remained stubbornly entrenched at 47.2 for a second consecutive month, entirely missing the expected uptick to 47.5. ISM Manufacturing Prices Paid also backslid more than expected over the same period, falling into contractionary territory at 48.3, down from the previous 54.0. 

Looking further into US data, JOLTS Job Openings in August rose to 8.04 million, over and above the previous period’s revised 7.7 million. Still, the widening expanse of listed job openings may not translate directly into new hires after the ISM Manufacturing Employment Index for September fell to 43.9 from the previous 46.0, entirely missing the forecast upswing to 47.0.

Investor attention has swung around to focus entirely on Middle East geopolitical tensions after early reports that Iran has executed a first missile barrage against Israel in response to Israel’s recent invasion of Lebanon. The US has declared it will retaliate on Israel’s behalf, and investors are balking at the prospect of a rapid escalation of the ongoing conflict.

GBP/USD price forecast

Cable’s backslide on Tuesday has dragged the pair back below the 1.3300 handle. Price action is now poised for a downside extension back into the 50-day Exponential Moving Average (EMA) near 1.3100. However, the way is anything but straightforward for an extended bearish push into the previous swing low just north of 1.3000.

GBP/USD daily chart

• GBP/USD declines by over 0.50%, on sour sentiment due to Middle East tensions.
• UK Manufacturing PMI expanded but slowed, while US ISM Manufacturing PMI improved yet remained in contractionary territory.
• A break below 1.3300 could lead to testing support at 1.3266, with further downside risk toward 1.3200 and 1.3145.

The Pound Sterling fell against the Greenback during the North American session, losing over 0.50% amid a risk-off mood due to heightened tensions in the Middle East. At the time of writing, the GBP/USD trades at 1.3300.

Business activity remains resilient, according to S&P Global, which revealed September’s Manufacturing PMI expanded as expected but slowed compared to the previous reading. Across the pond, the ISM Manufacturing PMI improved yet remained in contractionary territory.

GBP/USD Price Forecast: Technical outlook

The GBP/USD extended its losses below 1.3300, opening the door for further downside. Sellers are eyeing August 27’s peak of 1.3266. In the short term, momentum shifted to be bearish, as portrayed by the Relative Strength Index (RSI), which aimed toward its neutral line. However, the RSI is still in bullish territory.

Once the GBP/USD clears the August 27 high, the next support would be the 1.3200 figure. On further weakness, the next stop would be the September 17 daily low of 1.3145, followed by the 1.3100 mark.

Conversely, for a bullish continuation, the GBP/USD must climb past 1.3300 and clear the top-trendline of the ascending channel at around 1.3380-90.

GBP/USD Price Action – Daily Chart

The Pound Sterling (GBP) is trading lower on the session, tracking the broader tone of the US Dollar (USD), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Rrisk of easing further on the break of 1.3313 support

“UK Manufacturing PMI was left unchanged at 51.5 in September. BoE policymaker Greene (a dissenter when the MPC voted to cut rates in August) commented that a rebound in consumer demand could lift inflation again and noted that while prices are ‘moving in the right direction’, it was questionable how quickly progress was being made.”

“Sterling gains have stalled in the low 1.34 area. A potential double top at 1.3430 warrants attention on the short-term chart. Loss of support at 1.3313 will open up the downside a little more for Cable and target a drop in the pound to 1.3195/00.”

The Pound Sterling (GBP) is expected to trade in a 1.3325/1.3410 range. In the longer run, current price movements are likely part of a range trading phase between 1.3300 and 1.3430, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Trading sideways for the time being

24-HOUR VIEW: “Yesterday, GBP traded between 1.3350 and 1.3423, close to our expected range of 1.3340/1.3420. Momentum indicators are mostly neutral, and further range trading appears likely. Expected range for today: 1.3325/1.3410.

1-3 WEEKS VIEW: “Last Thursday (26 Sep, spot at 1.3325), we indicated that ‘the more than week-long GBP strength has ended.’ We expected GBP to ‘trade in a 1.3200/1.3430 range for the time being.’ After GBP rose to 1.3434, we indicated last Friday (27 Sep, spot at 1.3410) that ‘while upward momentum seems to be building again, it is not enough to indicate the resumption of GBP strength.’ We also indicated that GBP ‘must break and hold above 1.3455 before further advance to 1.3500 can be expected, and the likelihood of it breaking clearly above 1.3455 appears low for now, but it will remain intact as long as 1.3310 is not breached within these few days.’ Yesterday, GBP rose to 1.3423, then pulled back to close largely unchanged at 1.3377 (+0.04%). Although our ‘strong support’ level at 1.3310 has not been breached, the buildup in momentum has largely dissipated. In other words, the current price movements are likely part of a range trading phase, probably between 1.3300 and 1.3430.”

• GBP/USD trades with mild negative bias near 1.3370 in Tuesday’s Asian session. 
• Lower expectations of a jumbo Fed rate cut lift the US Dollar. 
• BOE’s Greene said strong UK consumers could fuel price pressures. 

The GBP/USD pair struggles to gain ground around 1.3370 during the Asian session on Tuesday. Less dovish remarks from Federal Reserve (Fed) Chair Jerome Powell provide some support to the Greenback and drag the major pair lower. Investors brace for the US September ISM Manufacturing Purchasing Managers Index (PMI) data and the speeches from Fed’s Raphael Bostic and Lisa Cook later on Tuesday. 

Fed Chair Jerome Powell said on Monday that the US central bank intends to do what it takes to keep the economy "in solid shape," but it is not in a hurry and will lower its benchmark rate ‘over time.’ Atlanta Federal Reserve President Raphael Bostic noted on Monday he would be open to another 50 basis point (bps) rate reduction at the November meeting if upcoming data show job growth slowing faster than expected. However. Bostic said he previously penciled in just one more 25 bps rate cut this year.

The US labor market data will take center stage on Friday and will likely influence the US rate cut path. The US Nonfarm Payrolls (NFP) is estimated to see 140K job additions in September, while the Unemployment Rate is forecast to remain unchanged at 4.2%. If the jobs report showed a weaker-than-expected outcome, this could prompt the central bank to consider cutting rates more deeply, which might exert some selling pressure on the USD. 

On the Cable front, the Bank of England (BoE) policymaker Megan Greene said that a consumption-driven recovery in the UK could set off a renewed bout of inflation, but further interest rate cuts are likely as prices are “moving in the right direction, per Bloomberg. Nonetheless, traders have lowered their bets on a BOE rate cut in November in the last few days.

• GBP/USD churned just below the 1.3400 handle on Monday.
• BoE policy hearings and US NFP data loom over the horizon.
• Fed talking points trim hopes for double rate cut in November.

GBP/USD cycled just south of the 1.3400 handle to kick off the new trading week, but intraday price action flubbed the key price level, closing back below the round figure barrier after cautionary statements from Federal Reserve (Fed) Chair Jerome Powell trimmed rate cut expectations and bolstered the Greenback.

High-impact data is limited for GBP traders this week, but Cable bidders will be keeping an eye out for the Bank of England’s (BoE) Monetary Policy Report Hearings due early Thursday. On the US side, markets will be broadly pivoting into watching the runup to Friday’s US Nonfarm Payrolls report for September.

Fed officials hit the wires on Monday, with Atlanta Fed President Raphael Bostic drawing a line in the sand on the jobs market and tipping his hand to investors for what they should expect in regards to further rate cuts when it comes to data. The Fed’s Bostic noted that NFP jobs prints below 100K would be a magic number that might trigger further steep action from the Fed.

Fed head Jerome Powell followed up Atlanta Fed President Bostic, noting that investors shouldn’t expect any more outsized rate cuts unless a significant downturn in US economic data rears its a head, a proposition that sent the Greenback higher and rate traders trimming their expectations for a 50 bps rate cut in November. Fed Chair Powell openly telegraphed to investors that after September’s opening volley of a jumbo rate cut, the Fed is likely on pace to only deliver another two 25 bps rate trims heading into next year.

GBP/USD price forecast

With bulls struggling to drag Cable into fresh chart paper on the high side, GBP/USD is beginning to flash warning signs that the pair is overdue for a bearish pullback. Cable has gained around 3.3% from the last swing low into the 1.3000 handle barely two weeks ago.

Short interest will pile in for an initial drive back into the 50-day Exponential Moving Average (EMA) near 1.3100.

GBP/USD daily chart

• GBP/USD rises, supported by solid UK GDP figures, but fails to sustain above 1.3400.
• Momentum favors upside, with RSI in bullish territory; resistance stands at 1.3400, followed by YTD high at 1.3434.
• If GBP/USD fails to break higher, support lies at 1.3359, with further downside risk toward 1.3312 and 1.3248.

The Pound Sterling held to gains against the Greenback during the North American session and edged up 0.14%. Earlier, solid Gross Domestic Product (GDP) figures in the UK sponsored a leg-up above 1.3400, but bulls failed to hold the exchange rate above the latter. The GBP/USD trades at 1.3387.

GBP/USD Price Forecast: Technical outlook

Even though the GBP/USD is bullish-biased, failure to decisively clear the year-to-date (YTD) high of 1.3434 might open the door for further downside.

Momentum favors buyers, with the Relative Strength Index (RSI) aiming up at bullish territory. Hence, the path of least resistance is tilted to the upside.

The GBP/USD first resistance would be 1.3400. A breach of the latter will expose the daily high of 1.3422, followed by the YTD peak at 1.3434.

Conversely, if bears keep the exchange rate below 1.3400, further losses lie ahead. The first support is 1.3359, today’s low, followed by the September 25 cycle low of 1.3312. If surrendered, up next lie the September 23 low of 1.3248.

GBP/USD Price Action – Daily Chart

The Pound Sterling (GBP) is expected to trade in a 1.3340/1.3420 range. In the longer run, GBP must break and hold above 1.3455 to resume strength, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP must break and hold above 1.3455 to resume strength

24-HOUR VIEW: “We expected GBP to edge higher last Friday, but we held the view that ‘any advance is unlikely to break above 1.3455.’ GBP subsequently rose, but less than expected, reaching a high of 1.3428. GBP closed lower by 0.32% at 1.3372. Momentum indicators are turning flat, and the current price movements are likely part of a range trading phase. Expected range for today: 1.3340/1.3420.”

1-3 WEEKS VIEW: “Last Thursday (26 Sep, spot at 1.3325), we indicated that ‘the more than week-long GBP strength has ended.’ We expected GBP to ‘trade in a 1.3200/1.3430 range for the time being.’ After GBP rose to 1.3434, we indicated last Friday (27 Sep, spot at 1.3410) that ‘while upward momentum seems to be building again, it is not enough to indicate the resumption of GBP strength.’ We also indicated that GBP ‘must break and hold above 1.3455 before further advance to 1.3500 can be expected, and the likelihood of it breaking clearly above 1.3455 appears low for now, but it will remain intact as long as 1.3310 is not breached within these few days.’ We continue to hold the same view.”