GBP/USD Forecast: Dollar Dips as Growth Worries Weigh

• The GBP/USD forecast indicates a pause in the dollar’s relief rally.

• The dollar rose in the previous session as Trump reassured markets that he had no intention of firing Powell.

• Business activity in the US services sector declined, overshadowing the slight improvement in manufacturing activity.

The GBP/USD forecast indicates a pause in the dollar’s relief rally as focus shifts back to the US economic slowdown. Meanwhile, business activity slowed in the US and the UK, showing the impact of Trump’s recent tariff campaign. 

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The pound paused its decline on Thursday as the greenback’s rally lost steam. Previously, the dollar rebounded as sentiment improved on the US economy. Notably, Trump stopped his attacks on the Fed Chair Powell. The president had accused Powell of being slow and threatened to fire him. Trump wants the Fed to continue cutting rates to support the weaker economy. However, Powell is waiting for more evidence that rates need to be lower. On Thursday, the dollar rose as Trump reassured markets that he had no intention of firing Powell. 

Additionally, sentiment improved after the White House hinted at a likely trade deal to lower tariffs on China. An end to the raging trade war would lift the cloud of uncertainty over the US economy. 

Market participants also focused on business activity data from the US and the UK. In the US, business activity in the services sector declined, overshadowing the slight improvement in manufacturing activity. Meanwhile, in the UK, service sector activity decreased, while manufacturing activity remained steady.

GBP/USD key events today

• Unemployment Claims

GBP/USD technical forecast: Decline pauses to retest 30-SMA

On the technical side, the GBP/USD price has broken below the 30-SMA, indicating a shift in sentiment. At the same time, the RSI broke below 50, suggesting stronger bearish momentum. Previously, bulls were in the lead, and the price traded above the SMA. However, this changed when it met the 1.3401 resistance level. Here, bears emerged and pushed the price below the SMA.

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This breakout signals a likely bearish reversal. However, bears must show they can sustain a strong downtrend. To do this, the price must break below the previous low at the 1.3200 key support level. 

Such a move would make a lower low, confirming a downtrend. Moreover, to maintain the move, the GBP/USD price must continue to make lower highs and lower lows.

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