- Jeremy Hunt introduced tax cuts and growth-boosting measures in his autumn budget.
- Hunt forecasted a slower UK economic outlook than anticipated.
- Data indicated a larger-than-expected drop in US unemployment claims.
Thursday witnessed a steadying pound, pausing its previous-session decline and contributing to a cautiously optimistic GBP/USD outlook. On Wednesday, UK Finance Minister Jeremy Hunt introduced tax cuts and growth-boosting measures in his autumn budget. However, despite these initiatives, he forecasted a slower economic outlook than anticipated.
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Notably, he announced worker tax cuts and provided permanent investment incentives for businesses. These reforms are meant to accelerate an economy stuck in a slow growth pattern before the expected 2024 election.
Conversely, the dollar index rose on Wednesday, recovering after economic data indicated a larger-than-expected drop in US unemployment claims last week. The Labor Department reported a 24,000 decrease in initial claims for state unemployment benefits. It marked the lowest level in over a month.
Moreover, the dollar continued its gains after the University of Michigan’s survey revealed that US consumers’ inflation expectations rose for the second month in November.
Meanwhile, other data showed a more substantial-than-expected decline in orders for durable US manufactured goods in October. This drop came from lower orders for motor vehicles. Moreover, there were strikes by the United Auto Workers union against Detroit’s Big Three automakers.
The dollar index had reached its lowest level since Aug. 31 on Tuesday. However, it stabilized after minutes from the Federal Reserve’s last meeting. The minutes suggested the central bank’s inclination to maintain a restrictive stance on interest rates for some time. Still, additional rate hikes are unlikely.
GBP/USD key events today
The pair will likely move sideways as markets in the US are closed for the Thanksgiving holiday.
GBP/USD technical outlook: Price hits 30-SMA support amid uptrend weakness
The pound dropped to the 30-SMA support after the RSI pointed to weakness in the uptrend. It is a sign that bears took advantage of bullish weakness to lower the price. However, they could not change the bias to bearish as they failed to break below the 30-SMA.
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Moreover, the RSI stayed above the pivotal 50 level, supporting bullish momentum. The price is currently trading near the 1.2501 key level and the SMA. There is a high chance that the bulls will regain momentum and bounce off this support zone. However, there will be a shift in sentiment if the price falls below the 30-SMA.
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