- The Bank of England will likely stick to a gradual pace for rate cuts next year.
- US job vacancies rose more than expected.
- Markets are pricing a 75% chance of a Fed cut in December.
The GBP/USD forecast indicates a strong pound after slightly hawkish Bank of England remarks. Meanwhile, the dollar gained after upbeat data in the previous session, and markets awaited more crucial US employment figures.
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BoE governor Andrew Bailey on Wednesday noted that the Bank of England would stick to a gradual pace for rate cuts next year. Markets are pricing four rate cuts in 2024. However, they do not expect any more cuts this year.
Meanwhile, the greenback rose on Tuesday after figures showed that US job vacancies rose more than expected. The JOLTs report revealed 7.74 million job openings, above estimates of 7.51 million. The numbers indicated a high demand for labor. However, there was little impact on rate cut expectations as traders awaited the more crucial nonfarm payrolls report.
According to estimates, the economy might add 195,000 new jobs in November. Meanwhile, the unemployment rate might increase to 4.2%. The last report showed dismal job growth at 12,000.
However, experts chalked it up to hurricane disruptions. Another month of poor job growth could be a red flag for the labor sector. Moreover, it would increase bets for a rate cut in December, weighing on the dollar.
On the other hand, an upbeat report could lower the chances of a rate cut, boosting the greenback. At the same time, traders will pay attention to Powell’s speech later in the day for clues on the outlook for rate cuts. Currently, markets are pricing a 75% chance of a cut in December.
GBP/USD key events today
- US ADP non-farm employment change
- US ISM services PMI
- Fed Chair Powell Speaks
GBP/USD technical forecast: Struggling to break 1.2701 resistance
On the technical side, the GBP/USD price has bounced off the 30-SMA but failed to breach the 1.2701 resistance level. Bulls took over when the downtrend paused at the 1.2500 support level. The price broke above the 30-SMA and made a new high slightly above the 1.2701 resistance level.
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From here it retested the 30-SMA as support and remained attached to the line. A surge in bullish momentum will allow the price to break above 1.2701 to continue the uptrend. Otherwise, it might break below the SMA to retest the 1.2500 support.
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Saqib Iqbal
