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  • GBP/USD gained on Good Friday, supporting the Bank of England’s hopes for a rate hike and showing caution ahead of US non-farm payroll data.
  • Oxford Economics proposes another rate hike from the Bank of England due to persistent inflationary pressures.
  • Brexit deal fears are challenging GBP/USD rates, while disappointing US data raises recession fears and creates pressure on the US dollar.

The GBP/USD forecast gained value at the beginning of Good Friday morning in London, reaching 1.2430-40, its first daily gain in three days. This shows that the cable pair supports the Bank of England’s (BoE) hopes for a rate hike and indicates cautious sentiment ahead of key US non-farm payrolls (NFP) data.

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Andrew Goodwin, the UK chief economist at Oxford Economics, suggests that the Bank of England should raise interest rates by another 0.25% due to persistent inflationary pressures. However, the UK house price index still shows price pressures. The BoE Monthly Survey of the Group of Decision Makers (DMP) predicts a likely fall in the consumer price index (CPI) to 5.8% from the 5.9% expected in February.

Concerns that a new Brexit deal will discourage imports from the European Union (EU) are affecting GBP/USD rates. The Cold Chain Federation says that new border control plans for goods entering the UK post-Brexit would discourage many EU suppliers and push food prices.

In the US, disappointing data raises concerns that the Federal Reserve System (Fed) will not hike interest rates in May, putting pressure on the US dollar. However, the same statistics raise recession fears and create a bottom for the dollar. At the same time, the US Dollar Index (DXY) continues its moderate growth, around 102.00.

Looking at US data, initial jobless claims for the week ended March 31 improved to 228k from the 200k expected and previously revised upwards to 246k. It should be noted that the number of job cuts at Challenger for the month increased to 89.703 thousand from 77.77 thousand in the previous month. The US JOLTS jobs fell to a 19-month low in February, while ADP jobs change in March disappointed markets at 145k read. The US ISM Services PMI for March also fell, adding to pessimism.

Market sentiment remains unsatisfactory, and yields appear to be halting the recent decline, which poses challenges for GBP/USD buyers. However, everything depends on the US employment report for new calls.

GBP/USD technical forecast: Bulls pause amid low volatility

GBP/USD technical forecast
GBP/USD technical forecast chart

The 4-hour chart of the GBP/USD shows a strong bullish trend. The 30-SMA continues to lend support to the pair. However, the price remains in a corrective downside phase after a multi-month peak of 1.2525.

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The pair lacks volatility and awaits a catalyst to trigger the directional bias. Hence, waiting until the market resumes trending moves on either side is wise.

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