Home GBP/USD Outlook: Pound Pushes Higher Ahead of Powell

GBP/USD Outlook: Pound Pushes Higher Ahead of Powell

  • Traders are awaiting Fed Chair Jerome Powell’s testimony.
  • UK business activity increased in February at its strongest rate in eight months.
  • Financial markets anticipate the Bank of England’s main rate will peak at 4.75% in August.

Today’s GBP/USD outlook is bullish. The US dollar fell on Monday as traders awaited Federal Reserve Chair Jerome Powell’s testimony and anticipated the release of the February jobs report at the end of the week. The jobs report will determine how hawkish the US central bank will be.

Are you interested to learn more about CFD brokers? Check our detailed guide-

Given that Powell will talk before the publication of the jobs data, Citi strategists believe he will prefer a 25-bps increase while leaving all other options open.

The pound increased on Friday due to data showing that business activity expanded in February at its strongest rate in eight months. This supported investors’ expectations that UK interest rates will continue to rise after March.

The pound gained about 1% last week, helped in part by an increase in forecasts for UK interest rates and a deal Britain reached with the EU regarding Northern Ireland’s post-Brexit trading regulations.

Financial markets anticipate that the Bank of England’s main rate will peak at 4.75% in August, up from its current 4.0%. This is above predictions for a peak of roughly 4.0% made one month earlier.

BoE Chief Economist Huw Pill stated on Thursday that the UK economy is exhibiting more momentum than anticipated and that wage growth is moving faster than the central bank expected last month. It all supports the notion that UK rates won’t peak just yet.

GBP/USD key events today

Investors will see the business activity level in the UK construction industry when the construction PMI data is released later today.

GBP/USD technical outlook: Bulls take the lead in the range area

GBP/USD technical outlook

The 4-hour chart shows GBP/USD in a bullish move, with the price slightly above the 30-SMA and the RSI above the 50-level. On a larger scale, the price trades in a range with the support at 1.1925 and resistance at 1.2128. 

Are you interested in learning more about spread betting brokers? Check our detailed guide-

Bulls have been in control since the price reversed at 1.1925 support. They managed to break above the 30-SMA and have retested it. If the price stays above the SMA, bulls will likely head for the range resistance at 1.2128.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.