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GBPUSD Outlook: Data Updates Ahead of Key Monetary Policies

Article By: ,  Market Analyst
September 9, 2024 4:35 AM

Key Events for the Week Ahead

  • UK Claimant Count Change on Tuesday
  • UK GDP on Wednesday
  • US Consumer Price Inflation indicators on Wednesday
  • US Producer Price Inflation and Unemployment claims on Thursday

Recent economic data from both the UK and US indicate a likely rate hold from the Bank of England (BOE) this month, while the Federal Reserve is expected to implement a rate cut. This has kept the British pound relatively stable against the US dollar. However, the scale of the Fed’s rate cut, combined with developments in the UK’s economic indicators, will be closely monitored this week for potential shifts in market sentiment.

The Fed is widely expected to enact a 25-basis-point rate cut, which has already been priced into the market and reflected in the dollar index. For a more significant move lower in the index, a larger-than-expected cut may be required.

Ahead of next week’s decision, Wednesday’s US CPI data will likely shape market trends, impacting the GBPUSD in the process.

On the other hand, continued weakness in the UK labor market, highlighted by a surge in claimant count to 135K in July, along with a drop in economic growth from 0.4% to 0%, adds further uncertainty to the BOE policy expectations.

Technical Outlook

GBPUSD Outlook: GBPUSD – 3 Day Time Frame – Log Scale

 Source: Tradingview

As GBPUSD remains above its 15-year consolidation, support levels are expected near the trendline connecting the highs of 2014 and 2021, at the 1.3030 and 1.2970 zones, before any potential continuation of the uptrend.

On the upside, a breakout above the 1.3280 level is anticipated to reinforce the uptrend towards levels 1.35 and 1.37 respectively.

 

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

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