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GBPUSD Forecast: Hawkish Fed Strengthens Resistance Levels

Article By: ,  Market Analyst
October 1, 2024 10:00 AM

Key Events

  • Powell’s speech reduced the likelihood of a 50-bps cut
  • US ISM Manufacturing PMI
  • US JOLTS Job Openings
  • US ISM Services (Thursday)
  • US Non-Farm Payrolls (Friday)

Source: CME Group

In his speech at the National Association for Business Economics, Fed Chair Powell shifted market expectations toward a more moderate 25 bps rate cut, with the likelihood rising to 65%. Powell highlighted the balance of two-sided risks, pointing out a solid labor market and progress on disinflation, with no preset pace for the easing cycle.

As a result, the US Dollar Index (DXY) has maintained its range, stabilizing above the 100 support level and putting pressure on both EURUSD and GBPUSD, keeping them below critical resistance levels of 1.12 and 1.3430, respectively.

Upcoming US Data

The market’s rate cut expectations may shift again, depending on the upcoming data from US ISM Manufacturing (underperforming since May), ISM Services PMI (which could impact disinflation), and Non-Farm Payrolls on Friday, potentially reshaping the rate cut outlook.

Technical Outlook

GBPUSD Forecast: Daily Time frame – Log Scale

Source: Tradingview

The DXY’s stability above the 100-support has stalled the GBPUSD uptrend, aligning with resistance from a trendline connecting the highs of June, July, August, and September, around the 1.3430 mark.

A confirmed close above this resistance could propel the pair toward the 1.618 Fibonacci extension, between the 2022 low (1.0343), 2023 high (1.3140), and October 2023 low (1.2037).

On the downside, potential pullbacks could extend to 1.33, 1.3260, and 1.3220.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

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