- Dovish Fed expectations and declining US growth weigh on the dollar.
- The UK’s fiscal challenges and the cautious Bank of England’s policy stance limit the pound’s uptrend.
- Traders look ahead to the IMF meetings and comments from FOMC and MPC members for further policy cues.
The GBP/USD outlook indicates bullishness as the pair trades around 1.3450, now entering its third-day winning streak, amid expectations of Fed easing. The Fed’s Beige Book reflected an economic slowdown, with more layoffs and less consumer spending. Comments from the Fed’s Waller and Miran favored monetary easing.
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The persistent US government shutdown and heightened US-China trade frictions weigh the greenback. Meanwhile, the market sentiment remains cautious as investors favor safe-haven assets like gold amid risk aversion in global markets.
The Dollar Index (DXY) is ready to brace for its most significant weekly drop for the first time in three months, signaling a reduced investor confidence in the US growth outlook.
On the UK part, the GBP witnesses modest growth, backed by waning dollars but capped by domestic challenges. The weakening labor data, released earlier this week, strengthened expectations of further rate cuts by the BoE. Meanwhile, concerns about the UK’s fiscal position ahead of the Autumn budget weigh the sentiment.
GBP/USD Daily Key Events
The significant events in the day include
- IMF meetings
- FOMC member Miran speaks
- FOMC’s Kashkari speaks
- FOMC Musalem speaks
- MPC Pill speaks
- MPC Greene speaks
- MPC Breeden speaks
Traders look forward to the IMF meeting, FOMC member speeches, and MPC member speeches for insights into the policy direction and broader economic outlook.
GBP/USD Technical Outlook: Upside Capped by 200-MA
The GBP/USD 4-hour chart suggests the pair stays firm around the 1.3450 level, after last week’s pullback near 1.3250. The pair remains above the 20 and 50 key moving averages, indicating a near-term uptrend. However, the 200-period SMA around the 1.3490-1.3500 zone caps further upside. A sustained break above this zone could extend the rally to the 1.3545-1.3550 levels.
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The RSI is at 60, indicating a positive territory, suggesting a slight consolidation before further upside. Immediate support sits at 1.3400, 1.3350, and 1.3300, where new interest could emerge.
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