|premium|

GBP/USD Forecast: Bulls might aim to test 200-day SMA barrier, around 1.3300

  • GBP/USD struggles to capitalize on an intraday move up amid a modest USD recovery.
  • Dovish Fed expectations and a positive risk tone might cap the safe-haven Greenback.
  • The end of the UK budget uncertainty offsets BoE rate cut bets and favors the GBP bulls.

The GBP/USD pair climbs to a four-week top on Thursday, though the intraday positive move falters near the 1.3265-1.3270 area during the early European session. The US Dollar (USD) rebounds slightly from over a one-week low and recovers a part of its losses registered over the past two days, which is seen acting as a headwind for the pair. Any meaningful USD appreciation, however, seems elusive amid dovish Federal Reserve (Fed) expectations. Furthermore, an end to the uncertainty surrounding the UK budget and upwardly revised growth forecasts for 2025 could support the British Pound (GBP). This might contribute to limiting the downside for the currency pair.

A mixed set of US economic indicators released this week did little to alter expectations that the Federal Reserve (Fed) will lower borrowing costs again at its December policy meeting. The US Producer Prices Index (PPI) came in line with consensus estimates and pointed to signs of easing inflation, while US Retail Sales rose less than expected in September. This, to a larger extent, offsets Wednesday's mostly upbeat US macro data. The US Census Bureau reported that new orders for manufactured durable goods rose 0.5% in September, compared to 0.3% anticipated. Separately, figures published by the US Department of Labor showed that the number of Americans filing new applications for unemployment benefits fell to a seven-month low in the week ending November 22.

Adding to this, the recent dovish remarks from several Fed officials suggested that another interest rate cut in December is a live option. According to the CME Group's FedWatch Tool, traders are currently pricing in around an 85% chance of a move next month. Adding to this, speculations about a potentially dovish successor to Fed Chair Jerome Powell and the upbeat market mood might cap the attempted recovery for the safe-haven USD. Bloomberg reported this week that White House National Economic Council Director Kevin Hassett – a close ally of U.S. President Donald Trump – is seen as the frontrunner to become the next Chair and is widely expected to enact the president’s calls for sharply lower interest rates. This warrants some caution for the USD bulls and should support the GBP/USD pair.

Meanwhile, UK Chancellor Rachel Reeves delivered her long-awaited autumn budget on Wednesday, though the immediate market reaction turned out to be muted amid the upbeat growth forecasts for 2025. The UK Office for Budget Responsibility (OBR) predicts the economy will expand by 1.5% this year, higher than its previous estimate of 1%. Adding to this, Reeves said the government had beat the growth forecast this year and added that it will beat them again. This, in turn, might hold back the GBP bears from placing aggressive bets and contribute to limiting the downside for the GBP/USD pair. However, bets for an interest rate cut by the Bank of England (BoE) next month makes it prudent to wait for strong follow-through buying before positioning for a further appreciating move for the pair.

GBP/USD daily chart

Technical Outlook

The overnight sustained close above the 1.3200 mark favors the GBP/USD bulls amid positive oscillators on the daily chart. The said handle might now offer immediate support to spot prices. Any further weakness is more likely to attract fresh buyers near the 1.3145 region and find decent support near the 1.3100 mark. A convincing break below the latter, however, would negate the positive bias and expose the 1.3040-1.3035 support. The pair could eventually drop to test the 1.3000 psychological mark, or the lowest level since April, touched earlier this month.

On the flip side, the daily swing high, around the 1.3265-1.3270 region, now seems to act as an immediate hurdle, above which the GBP/USD pair could climb to the 1.3300 round figure. The latter represents a technically significant 200-day Simple Moving Average (SMA), which, if cleared decisively, would set the stage for additional gains towards the 1.3365-1.3370 zone en route to the 1.3400 mark.

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 PremiumSign In

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.