GBP/USD Price Forecast: Bearish Sentiment at 1.2847 Amid Rate Cut Speculations

The GBP/USD price forecast remains tilted towards bearish sentiment as the pair continues to grapple with downward momentum, now around the 1.2847 mark. This trend is largely fueled by the resurgence of the US dollar, which initially weakened following disappointing US unemployment figures but later recovered on the back of strong Nonfarm Payrolls data.

Additionally, the shrinking policy divergence between the Federal Reserve and the Bank of England places added pressure on the pound.

Interest Rate Speculations Weigh on GBP/USD

Expectations are mounting in the UK financial markets about the Bank of England’s potential rate cuts, possibly commencing as early as May with projections of three additional reductions throughout 2024.

Such speculations are casting a shadow over the GBP/USD, especially with the Federal Reserve anticipated to initiate rate cuts before the BoE, potentially closing the policy gap between the two entities.

US Dollar Strengthens Following Employment Data Surge

The US dollar found new footing, reversing prior losses after the release of impressive Nonfarm Payrolls data. Despite an uptick in the unemployment rate raising expectations for a Federal Reserve rate reduction in June, the February jobs report showed a substantial addition of 275,000 positions, exceeding forecasts and revising January’s figures downward, which revitalized the US dollar’s strength.

Upcoming Economic Data to Influence GBP/USD Dynamics

The market’s focus is now turning towards forthcoming UK employment data, including the ILO Unemployment Rate and Employment Change, expected to be released on Tuesday.

Additionally, February’s Consumer Price Index will be closely watched. Despite the bearish outlook due to interest rate cut anticipations and the Fed’s policy adjustments, the UK’s positive economic forecast post-Spring Budget and anticipated growth could lend some support to the pound.

The convergence of these factors—policy divergence concerns, US dollar’s recovery on robust employment data, and anticipation surrounding UK’s economic indicators—paints a complex picture for the GBP/USD pair.

As such, investors and traders should brace for potential volatility and closely monitor these developments to navigate the currency pair’s trajectory effectively.

GBP/USD Price Forecast: Technical Outlook

The GBP/USD pair experienced a marginal decline, trading at 1.28512, down by 0.03%. Analysis on a 4-hour chart identifies a pivot point at $1.28308, with immediate resistance levels at $1.28950, $1.29903, and $1.30912.

Support levels are found at $1.27654, $1.26955, and $1.25977. The Relative Strength Index (RSI) stands at 70, indicating potential overbought conditions.

The 50-day Exponential Moving Average (EMA) at $1.26657 suggests an underlying bullish trend. However, the formation of a Doji candle on the daily chart, amid a bullish trend, hints at indecision.

Should the GBP/USD fall below $1.2895, it could trigger a bearish correction towards $1.28300 or $1.2765. Conversely, surpassing this threshold might signal a strengthening bullish momentum.