GBP/USD Steady at $1.2780 Amid Powell’s Cautious Fed Outlook

The GBP/USD pair has been relatively stable for the second day, hovering around $1.2780 in Wednesday’s Asian trading session.

Arslan Butt•Wednesday, July 10, 2024•2 min read

The GBP/USD pair has been relatively stable for the second day, hovering around $1.2780 in Wednesday’s Asian trading session.

This stability in the pair is largely due to a stronger US Dollar, which gained strength after Federal Reserve Chairman Jerome Powell’s cautious comments to the US Congress.

Despite noting improved inflation figures, Powell maintained a cautious outlook, indicating that rate cuts are off the table until inflation reliably moves towards the 2% target.

“More good data would strengthen our confidence in inflation,” Powell remarked, underscoring that “a policy rate cut is inappropriate until the Fed gains greater confidence that inflation is sustainably trending toward 2%.”

Anticipation Builds for More Fedspeak and CPI Data

The financial markets are bracing for more insights as Powell prepares for his second semi-annual testimony. Additionally, speeches from Fed officials Michelle Bowman and Austan Goolsbee will further guide market expectations.

All eyes are also set on the forthcoming US Consumer Price Index (CPI) data, expected on Thursday, which could significantly influence market movements. In the UK, Bank of England policymaker Jonathan Haskel advocates for holding interest rates steady amid persistent job market inflation.

“I prefer to keep rates steady until we see more assurance that underlying inflationary pressures have truly diminished,” Haskel stated, highlighting ongoing economic uncertainties.

GBP/USD Technical Outlook and Trading Strategy

The British Pound is experiencing minor fluctuations against the Dollar, trading at $1.27871. The pair is trading within a tight range, potentially signalling upcoming volatility.

The pivot point at $1.27894, coinciding with the 50-period Exponential Moving Average (EMA), serves as a critical juncture for determining future movements. Immediate resistance levels are at $1.28232, $1.28323, and $1.28446, posing potential obstacles for upward movements.

Conversely, support is found at $1.27894, with further layers at $1.27350 and $1.27348, crucial for mitigating potential declines. The Relative Strength Index (RSI) at 44.16 indicates a slightly bearish market sentiment, suggesting that the pair might face selling pressure.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.