- The GBP/USD outlook remains subdued as a firmer dollar weighs on the pound.
- Dovish BoE amid worse economic data continues to weaken the sterling.
- Traders await the commentary from FOMC’s Bowman and MPC’s Breeden for further policy cues.
The GBP/USD outlook reflects a downside bias, marking its six-month lows under 1.3100 on Tuesday. The move stems from a stronger dollar amid declining odds for further Fed easing. The US Dollar Index reached a three-month peak near 99.85, after its earlier breach above the 100.00 mark.
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Meanwhile, the CME FedWatch tool reveals slim chances of a December rate cut, reflecting Chair Powell’s earlier cautiousness. San Francisco Fed President Mary Daly emphasized a restrictive monetary policy, considering the inflation above its 2% target.
Across the Atlantic, the divided policy split weighed on the pound sterling, pushing it lower against its major peers. Meanwhile, a cautious sentiment prevails in the market ahead of Thursday’s BoE meeting. Markets anticipate no change in this meeting, while the focus will be on the MPC members’ vote split. More votes in favor of a rate cut could ignite further sell-off.
Additionally, Chancellor Rachel Reeves hinted at the possibility of further tax hikes in the Autumn Budget to curb the £22 billion fiscal gap. Reeves further stated that inflation needs to decline amid the UK’s increasing borrowing costs and reduced productivity outlook, pressuring the pound further.
GBP/USD Daily Key Events
Significant events in the day include:
- FOMC member Bowman speaks
- RCM/TIPP Economic Optimism
- MPC member Breeden speaks
On Tuesday, traders await the FOMC member Bowman’s speech and the UK’s MPC member Breeden’s speech for further policy cues. However, the significant focus will be on Friday’s US NFP and Core PCE Index.
GBP/USD Technical Outlook: Bearish Momentum Hits Oversold Zone
The GBP/USD 4-hour chart reflects a continued downtrend, trading around 1.3070, with selling dominance below the key MAs. The price stays below the key 50-day and 200-day MAs, while a continued rejection persists near the 20-day MA at 1.3130.
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The RSI holds near 30, indicating oversold conditions, with no signs of a trend reversal. The downside could potentially extend to 1.3000 ahead of 1.2970. On the flip side, finding acceptance above the 20-period MA around 1.3130 could relieve the buyers ahead of 1.3200.
Support Levels
Resistance Levels
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