• The GBP/USD weekly forecast suggests further upside for the pound.
• The US CPI report revealed that inflation accelerated from 0.3% to 0.4%.
• US unemployment claims were higher than expected, supporting Fed rate cut bets.

The GBP/USD weekly forecast suggests further upside for the pound as traders gear up for a Fed rate cut on Wednesday.

Ups and downs of GBP/USD

GBP/USD ended the week higher as the dollar fell ahead of an expected Fed rate cut. US data during the week pointed to a spike in inflation. However, unemployment was also high.

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The US CPI report revealed that inflation accelerated from 0.3% to 0.4% monthly. Meanwhile, the annual figure accelerated to 2.9% as expected. However, traders were more focused on a separate report showing a jump in unemployment claims. It highlighted the weakness in the labor market, keeping Fed rate cut bets elevated. As a result, the dollar declined, allowing the pound to rally.

Next week’s key events for GBP/USD

Next week, market participants will pay attention to data from the UK, including employment, inflation, and retail sales. Meanwhile, the US will release its retail sales report and the Fed will hold its policy meeting on Wednesday.

UK data will show the state of growth and inflation, which will shape the outlook for Bank of England rate cuts. Meanwhile, traders expect the Fed to lower borrowing costs by 25-bps after recent data revealed a rapid decline in the US labor market.

GBP/USD weekly technical forecast: Bulls eye the 1.3803 resistance

On the technical side, the GBP/USD price has reversed its recent decline to start trading above the 22-SMA, with the RSI above 50. However, although the bias has turned bullish, bulls are yet to confirm a new trend with higher highs and lows. Instead, they are struggling to break above the 1.3575 resistance level.

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GBP/USD has had a strong bullish run, mostly keeping above the 22-SMA. However, this trend paused when it got near the 1.3803 level. At this point, bears took over by pushing the price below the 22-SMA. At the same time, the RSI dipped below 50 to support bearish momentum. However, the decline could not go beyond the 1.3200 support. As a result, bulls took over, pushing the price back above the SMA.

Now, they must break above the 1.3803 resistance to continue the previous rally. If they fail a second time, bears could return stronger to try to reverse the trend.

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