Start Trading Now Get Started
Affiliate Disclosure
Affiliate Disclosure DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

GBP/USD Forex Signal: Uptrend Loses Momentum Ahead of Fed Decision

By Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

Bearish view

  • Sell the GBP/USD pair and set a take-profit at 1.2310.
  • Add a stop-loss at 1.2525.
  • Timeline: 1-2 days.

Bearish view

  • Buy the GBP/USD pair and set a take-profit at 1.2525.
  • Add a stop-loss at 1.2315.

GBP/USD Signal Today 29/01: Weakens Ahead of Fed (graph)

The GBP/USD exchange rate retreated slightly as the US dollar index bounced back after falling sharply a few days ago. The pair peaked at 1.2525 on Monday and then dropped to 1.2425 ahead of the Fed interest rate decision.

Top Forex Brokers

1
Get Started 74% of retail CFD accounts lose money Read Review

Federal Reserve and Andrew Bailey's statement

The GBP/USD pair will be in focus on Wednesday as Andrew Bailey, the head of the Bank of England (BoE), delivers a closely watched statement. This statement will be important because it comes a few days before the upcoming central bank decision.

The BoE has embraced a more cautious tone than other central banks. It slashed interest rates two times last year, while the Fed and the ECB slashed them 3 and 4 times, respectively.

Analysts expect the bank to be more dovish this week because the economy is softening. Data released earlier this month showed that the economy barely grew in November, while inflation moved downwards slightly.

The main catalyst for the GBP/USD exchange rate will be the upcoming Federal Reserve interest rate decision. In it, officials are expected to maintain rates steady as they maintain their data-dependence.

Recent data has supported the case for a pause. Inflation has remained significantly above the Fed’s target of 2.0%, while the unemployment rate is above 4.0%. Further cuts may lead to higher inflation for longer, especially as Donald Trump warns about universal tariffs from key countries like Mexico, Canada, and China.

GBP/USD technical analysis

The four-hour chart shows that the GBP/USD pair has recovered modestly from this month's low of 1.2093 to a high of 1.2525.

It formed a series of higher highs and higher lows, which resulted into an ascending channel shown in purple.

The pair has now pulled back and moved below the lower side and moved to the 23.60% Fibonacci Retracement level. The Percentage Price Oscillator (PPO) has formed a bearish crossover, while the Relative Strength Index (RSI) has dropped and is nearing the neutral point at 50.

The pair will likely continue falling ahead of the upcoming Fed decision. If this happens, it will drop to the next point at 1.2310, the 50% Fibonacci retracement level. A move above the this week's high of 1.2525 will invalidate the bearish view.

Ready to trade our free daily Forex trading signals? We’ve shortlisted the best UK forex brokers in the industry for you.

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

Most Visited Forex Broker Reviews