- The GBP/USD forecast shows the pound trading lower amid the BoE’s dovish policy stance.
- The BoE kept rates unchanged at 4%, increasing the probability for easing in the coming months.
- Traders await the US preliminary UoM reports and commentary from FOMC and MPC members for further policy cues.
The GBP/USD forecast shows the pair trading slightly lower on Friday, near 1.3100, as the pound weakened amid the Bank of England’s dovish policy decision. As expected, the BoE kept the interest rates unchanged at 4% in the November meeting.
The MPC members’ votes revealed a 5-4 split, highlighting growing support for further rate cuts by the central bank. Four policymakers favored a 25 bps reduction to 3.75%, suggesting that the Central Bank could prepare for policy easing sooner than expected.
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The BoE’s stance also implied that if disinflation persists, the bank rate could gradually decline to support the easing economy instead of mitigating inflation. This stance weighed on the pound sterling, with investors anticipating a potential December rate cut, declining bond yields, and the pound’s momentum after its last rally.
Across the Atlantic, the greenback witnessed a boost amid fresh safe-haven demand and cautious optimism regarding the Fed’s next move. The US labor data came in softer, revealing over 153,000 job cuts in October, its highest in the past two decades. According to the CME FedWatch Tool, the markets are pricing in a 67% probability of a December Fed cut, instead of yesterday’s 62%. Meanwhile, the ongoing Federal government shutdown has halted key data releases, with traders focusing on private data sources for further near-term clues.
GBP/USD Daily Key Events
The major events in the day include:
- MPC Member Pill Speaks
- FOMC Member Jefferson Speaks
- Prelim UoM Consumer Sentiment
- Prelim UoM Inflation Expectations
On Friday, traders await the commentary from MPC member Pill and FOMC member Jefferson, along with the US Prelim UoM consumer sentiment, to gauge the momentum.
GBP/USD Technical Forecast: Struggling to Hold Above 1.3100
The GBP/USD 4-hour chart suggests a mild bearish bias as the pair trades near 1.3100, losing ground after surging from previous lows near 1.3050. The price remains below the key 50-, 100-, and 200-period MAs, indicating the bearish bias continues. However, the 20-MA near 1.3085 could support the pair.
The RSI declined to 50.0, suggesting consolidation after reaching posting recovery from 1.3000 mark. A sustained breach above the 50-MA near 1.3140 could open room for 1.13260. Conversely, a drop below 1.3100 could potentially trigger renewed selling pressure, extending the downside towards 1.3050 and 1.3000.
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Support Levels
Resistance Levels
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