- UK pay growth stagnated in the three months to September.
- Market participants will pay attention to a speech by BoE governor Andrew Bailey.
- The looming US election is keeping market participants on edge.
The GBP/USD price analysis shows bears regaining enthusiasm amid signs that the UK labor market is cooling. Meanwhile, the dollar strengthened as traders priced a more gradual easing cycle for the Fed. However, there was caution ahead of the US presidential election.
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UK pay growth in the three months to September stagnated, with firms expecting more cooling in wages in the coming year. Notably, pay growth held steady at 4.0%. Cooling labor market conditions will pressure the Bank of England to lower borrowing costs, weighing on the pound. Meanwhile, market participants will pay attention to a speech by BoE governor Andrew Bailey later in the day. Furthermore, the UK will release PMI data this week that might affect the outlook for BoE rate cuts.
Elsewhere, traders are more convinced that the Federal Reserve will stick to a gradual pace for rate cuts. Recent data on employment and sales has shown robust demand in the US economy. Therefore, there is no longer an urgency to lower borrowing costs. At the same time, inflation jumped in September, leading to a more cautious stance by most policymakers. Notably, some have projected only one more rate cut this year.
Investors will watch the upcoming PMI figures, showing the economy’s health. More upbeat reports might lower the likelihood of a rate cut in November, boosting the greenback.
Meanwhile, the looming US election is keeping market participants on edge. The tight race has increased uncertainty over the outcome, pushing traders to buy the safe-haven dollar.
GBP/USD key events today
- BOE Gov Bailey Speaks
GBP/USD technical price analysis: Bears aim for 1.2900 support
On the technical side, the GBP/USD price is on the verge of breaking below the 1.2960 support. Moreover, the price recently punctured this level to make a lower low. Bears are firmly in the lead, with the price below the 30-SMA and the RSI below 50.
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However, price action shows that the downtrend has slowed down. Bears are no longer making significant swings below the 30-SMA, showing weakness. Still, if the downtrend continues, GBP/USD will soon reach the 1.2900 level. The bias will only shift when the price starts trading above the 30-SMA.
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Saqib Iqbal
