GBP/USD Price Forecast: Bears seem non-committed as USD await Trump’s Fed chair pick

GBP/USD drifts lower amid a pickup in USD demand, though it lacks any follow-through.
Concerns about the Fed’s independence and rate cut bets keep a lid on the USD recovery.
The divergent Fed-BoE rate cut expectations contribute to limiting losses for spot prices.

Haresh Menghani FXStreet

The GBP/USD pair meets with a fresh supply following the previous day's good two-way price swings and sticks to a negative bias through the first half of the European session on Friday. The US Dollar (USD) gains some positive traction in reaction to the optimism over a Senate deal to fund the federal government, which, in turn, is seen as a key factor exerting pressure on spot prices. The lack of follow-through selling, however, warrants some caution before positioning for an extension of the retracement slide from the highest level since September 2021, around the 1.3870 region, touched earlier this week on Tuesday.

Democrats and the White House have reached an agreement to temporarily fund the Department of Homeland Security as lawmakers rush to pass the spending package by Friday to avoid a partial US government shutdown. This assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, to move further away from a four-year trough set on Tuesday. Despite the bounce, the USD remains on track to register its second straight week of losses amid economic and policy risks on the back of US President Donald Trump’s erratic decisions, and attacks on the Federal Reserve’s (Fed) independence.

In fact, Trump on Thursday announced his plans to decertify all Canada-made aircraft, accusing the latter of unfairly blocking certification of Gulfstream business jets. Trump threatened to impose a 50% tariff on all aircraft sold from Canada into the US until American-made Gulfstream jets receive certification in Canada, fueling concerns about a full-blown trade war between the two North American countries amid the rising risk of a military conflict with Iran. Adding to this, the White House said that Trump signed an executive order that would impose tariffs on countries that provide Crude Oil to Cuba.

Meanwhile, Trump took another jab at the Fed Chair Jerome Powell and said on Truth Social that the US central bank should substantially lower interest rates. Earlier this week, the Fed resisted the unprecedented political pressure and decided to leave rates unchanged while signaling that it would continue to adopt a cautious approach. All eyes are now on the announcement of Trump's pick to replace Jerome Powell as the next Fed chair. Reports suggest that the Trump administration is preparing to nominate former Fed Governor Kevin Warsh to be the next Chair later this Friday.

Nevertheless, investors remain worried about the freedom of monetary authorities from direct political interference in formulating policies. Moreover, traders are still pricing in the possibility of two more rate cuts by the Fed in 2026, which should keep a lid on the Greenback. The British Pound (GBP), on the other hand, might continue to be underpinned by supportive fundamentals, which tempered near-term Bank of England (BoE) rate cut expectations. This contributes to limiting losses for the GBP/USD pair, making it prudent to wait for strong follow-through before confirming that spot prices have topped out.

GBP/USD 1-hour chart

Technical Analysis:

The 100-hour Simple Moving Average (SMA) trends higher, and the GBP/USD pair holds above it, maintaining a mild bullish bias. The SMA stands at 1.3759 and offers nearby dynamic support. The Moving Average Convergence Divergence (MACD) line sits below the Signal line near the zero level, with a small negative histogram that suggests fading momentum. The Relative Strength Index (RSI) at 43 remains below the midline, reflecting subdued strength.

Measured from the 1.3344 low to the 1.3871 high, the 23.6% Fibonacci retracement level at 1.3747 offers initial support, and holding above it could keep the intraday tone supported. The rising 100-period SMA underpins the structure as price consolidates just above it. The MACD line remains below the Signal line around the zero mark, while the contracting negative histogram hints at stabilizing pressure. RSI at 43 stays neutral to soft, and a move through 50 could improve momentum.

On pullbacks, the 38.2% retracement at 1.3670 marks the next support, and a break beneath it would warn of a deeper correction within the broader upswing.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Haresh Menghani

FXStreet

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

AUD/USD bounces back toward 0.6950 on fresh USD supply

AUD/USD bounces back toward 0.6950 in the Asian session on Friday. The US Dollar retreats from 17-month highs as traders take profits off the table ahead of the all-important US Nonfarm Payrolls report. Meanwhile, the Australian Dollar draws support from reviving expectations of a November interest rate hike amid elevated global yields and inflation risks.

USD/JPY struggles near 158.00 as USD retreats ahead of NFP

USD/JPY is struggling for fresh impetus near 158.00, moving away from the top end of its weekly range in the Asian session on Friday, after hotter-than-expected Tokyo CPI and amid a broad US Dollar retreat. Traders reposition themselves ahead of US Nonfarm Payrolls.

Gold remains capped below $4,200 as traders await US NFP for Fed rate cuts

Gold extends its sideways move on Friday, trading below the $4,200 mark heading into the European session as traders await the release of US employment details. The US Nonfarm Payrolls report is expected to show that the economy added only 90K jobs in September, down from the previous month's reading of 162K.

Pi Network retreats to key support level as selling pressure resurfaces

Pi Network price remains volatile in the near term, hovering around $0.0900 at press time on Friday after losing over 3% the previous day. The pullback warns of a steeper correction, with a risk of breaking below a rising wedge pattern on the four-hour chart. Pi Network struggles to maintain a steady recovery as the price remains capped below the $0.1000 psychological barrier.

US jobs report is due: We expect a hot one

In Japan, September Tokyo core CPI rose to 2.7% (cons: 2.4%). The figure was above the BOJ's 2% target for the first time since January. In commodities, Brent crude futures traded above USD 102/bbl on Friday morning after the WSJ reported that the Pentagon will be sending a third aircraft-carrier strike group and additional soldiers to the Middle East.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Federal Reserve (Fed). Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario. Yet beneath that dramatic repricing, the US economy is sending a considerably less dovish message.