GBP/USD Forecast: Are pound bulls already losing faith?

GBP/USD has started to edge lower after rising to a two-week high on Thursday.
Four members of the BOE's MPC voted for a 50 bps hike in February.
Nonfarm Payrolls in the US is expected to rise by 150,000 in January.

Eren Sengezer FXStreet

GBP/USD has advanced to its strongest level in two weeks at 1.3629 on Thursday with the initial reaction to the Bank of England's (BOE) rate decision but struggled to preserve its bullish momentum. The pair trades in negative territory below 1.3600 early Friday as markets gear up for the US January jobs report.

As expected, the BOE hiked its policy rate by 25 basis points to 0.5%. Surprisingly, four members of the BOE's Monetary Policy Committee (MPC) voted for a 50 basis points rate increase. Although the initial reaction to the vote spilt provided a boost to the British pound, BOE Governor Andrew Bailey acknowledged that the economic outlook was worsening and caused the GBP to erase its gains.

Bailey expressed clearly that they raised the policy rate because they were worried about inflation getting out of control, not because the UK economy was roaring. Commenting on the rate outlook, "it would not be surprising if we see a further increase but please don't get carried away," Bailey added.

Later in the day, the US Bureau of Economic Analysis' January jobs report will be watched closely by market participants. The US Dollar Index is staying calm after losing nearly 0.7% on Thursday, causing GBP/USD to stay stuck in its daily range.

Nonfarm Payrolls (NFP) in the US is expected to rise by 150,000 in January and the low bar opens the door for a positive surprise. More importantly, Average Hourly Earnings are forecast to increase to 5.2% on a yearly basis. Since the Fed is concerned about wage growth feeding into consumer inflation, a stronger-than-expected print could help the dollar stage a recovery and vice versa.

GBP/USD Technical Analysis

GBP/USD is trading slightly below the four-day-old ascending trend line and the Relative Strength Index (RSI) indicator on the four-hour chart is edging lower toward 50, pointing to a loss of bullish momentum.

On the downside, the 100-period SMA and the Fibonacci 50% retracement of the latest downtrend form strong support at 1.3560. In case this level fails, additional losses toward 1.3520 (200-period SMA) and 1.3500 (psychological level) could be witnessed.

On the other hand, the pair needs to rise above 1.3600 (psychological level) and confirm it as support before it can target 1.3660 (static level).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.