Bearish View
- Sell the GBP/USD pair and set a take-profit at 1.2850.
- Add a stop-loss at 1.3050.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.2950 and a take-profit at 1.3050.
- Add a stop-loss at 1.2850.
The GBP/USD exchange rate remained under pressure after the Bank of England (BoE) and the Federal Reserve slashed interest rates 0.25%. The pair retreated to 1.2920, much lower than the year-to-date high of 1.3430.
Top Forex Brokers
BoE and Fed Interest Rate Cuts
The GBP/USD pair continued their downtrend after the Federal Reserve slashed interest rates on Thursday. It cut rates by 0.25%, bringing the target rate to between 4.50% and 4.75%.
The bank also committed to maintaining its data-dependence when determining whether to cut rates in the following meetings.
That meeting came a few days after the US published weak nonfarm payrolls (NFP) data. According to the Bureau of Labor Statistics (BLS), the economy added just 12,000 jobs in October, missing the estimated 100k. The unemployment rate remained above 4.1% during the month.
The Fed’s decision came on the same day that Donald Trump was re-elected the next president of the United States. Trump’s policies are expected to be much different from those of Kamala Harris, who would have continued with Trump’s policies.
The GBP/USD pair also reacted to the recent Bank of England decision in which officials decided to cut rates by 0.25% for the second time.
The bank sounded more cautious as officials warned that inflation was still a big concern. As such, they expect to maintain a gradual pace of cuts.
Looking ahead, the US will publish the latest consumer inflation data on Wednesday. Economists expect the data to show that the headline and core CPI numbers retreated slightly in October.
The key UK data to watch will be jobs and GDP on Tuesday and Friday, respectively. These numbers will likely have no major impact on the pair.
GBP/USD Technical Analysis
The GBP/USD pair remained under pressure ahead of the upcoming US inflation data. It has slumped below the lower side of the rising broadening wedge pattern, one of the most bearish signs in the market.
The pair has moved below the 25-day and 50-day moving averages. Also, the pair has formed a bearish pennant pattern. The MACD indicator has also remained below the zero line.
Therefore, the pair will likely continue falling as bears target the key support at 1.2820. This view will be invalidated if it rises above the key resistance at 1.3050.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.