- Powell confirmed that the Fed’s next policy move would be a rate cut.
- Data on Friday revealed a bigger-than-expected dip in US employment.
- Investors will focus on the Bank of England interest rate decision on Thursday.
The GBP/USD weekly forecast indicates a bullish trend as poor US employment data strengthens expectations for a Fed rate cut, putting pressure on the dollar.
Ups and downs of GBP/USD
The pound had a bullish week as the dollar fell due to Powell’s remarks and downbeat data from the US. When the week began, data from the US revealed a bigger-than-expected increase in labor cost growth. This gave the dollar a small lift. However, it gave up all its gains when Powell confirmed that the Fed’s next policy move would be a rate cut.
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Furthermore, data on Friday revealed a bigger-than-expected dip in US employment. At the same time, the unemployment rate increased, showing a slowdown in the labor market. This relieved the Fed, which is keeping a close eye on the labor market. At the same time, business activity in the service sector fell significantly, pointing to easing inflationary pressures.
Next week’s key events for GBP/USD
Next week, the UK will release data on manufacturing production and economic growth. However, investors will focus more on the Bank of England interest rate decision on Thursday. The central bank will likely hold rates to give clues on the future of interest rates in the UK.
Notably, investors have pushed back the timing for BoE rate cuts. This is because the UK economy has recovered from its shallow recession. At the same time, BoE policymakers are keeping an eye on the Fed, which has said it will delay rate cuts.
GBP/USD weekly technical forecast: Bullish momentum pushes past solid trendline
On the technical side, the GBP/USD price has broken above a solid resistance trendline and is testing the 1.2550 key resistance level. This indicates a surge in bullish momentum. At the same time, it has broken above the 22-SMA, confirming a shift in sentiment to bullish.
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However, bears are putting pressure on the move, leading to a big wick. It is clear that the tides are about to change for the pound, and this will become clearer with the next candle. There is a high chance that the new bias will continue next week. The price will likely retest the 1.2802 resistance level in such a case.
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Saqib Iqbal
