**GBP/USD Price Forecast: Steadies at 1.3480 as Fed Cut Prospects Loom**
*By TradingNews.com Team – Credit: TradingNews.com*
The British pound has shown remarkable resilience in recent trading sessions, with the GBP/USD pair stabilizing around the 1.3480 level. As market participants hone their focus on the Federal Reserve’s next move, the trajectory of the currency pair remains closely linked to evolving expectations regarding US monetary policy.
This comprehensive analysis delves into the technical and fundamental factors shaping the immediate outlook for GBP/USD, with an emphasis on the potential impact of an anticipated Fed rate cut. We also explore the broader macroeconomic landscape and key risk events likely to sway investor sentiment in the coming weeks.
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## Market Highlights
– **GBP/USD steadies at 1.3480 following a volatile week marked by shifting interest rate expectations**
– **Speculation about an imminent Federal Reserve interest rate cut is roiling FX markets**
– **Investors assess the pound’s relative strength amid UK economic headwinds**
– **Upcoming economic data releases and central bank guidance in sharp focus**
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## Fed Policy Expectations in the Spotlight
A principal driver for GBP/USD throughout 2024 has been the evolving outlook for US monetary policy. The Federal Reserve’s most recent meeting laid the groundwork for further market speculation, as central bankers signaled openness to easing policy rates should inflation continue to recede.
**Key points on Fed expectations:**
– Market pricing now reflects a heightened probability for a Fed rate cut within the next quarter.
– Softer US inflation data, with recent CPI and PCE readings moderating, have provided further impetus for dovish bets.
– Leading indicators, such as manufacturing PMIs and labor market numbers, suggest a potential slowdown in the US economy.
– Fed officials have tempered hawkish rhetoric, reinforcing the perception that monetary policy could soon turn more accommodative.
The upshot is a discernible softening in the US dollar, creating upward momentum for GBP/USD as investors reposition for a possible shift in the Fed’s interest rate regime.
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## UK Fundamentals: Domestic Pressures Remain
While the dollar side of the pair is under pressure, the British pound faces its own set of challenges. UK economic data has painted a mixed picture, casting uncertainty over the Bank of England’s policy stance and the durability of sterling’s current stability.
**Notable UK economic developments:**
– Recent UK GDP figures highlighted tepid growth, with the economy narrowly avoiding recession.
– Inflation in the UK remains elevated relative to the Bank of England’s 2 percent target, but is showing signs of moderation.
– Wage growth and consumer spending data are being carefully monitored for signals on underlying economic health.
– The Bank of England has adopted a cautious approach to rate adjustments, signaling data-dependence in upcoming policy decisions.
Against this backdrop, GBP/USD finds itself balancing potential support from a softer dollar against lingering UK growth concerns and the prospect of future domestic monetary easing.
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## Technical Analysis: GBP/USD Finds Its Footing at 1.3480
From a technical standpoint, the recent recovery and stabilization of GBP/USD at the 1.3480 level is seen as a constructive sign by many traders. This move follows an upswing from lows near 1.3360, coinciding with the broader retreat in the US dollar index.
**Key technical observations:**
– The 1.3480 zone acts as a pivotal resistance-turned-support, having repelled several attempts to move lower.
– Momentum indicators such as the Relative Strength Index (RSI) are hovering near neutral, suggesting room for further directional moves.
– The 50-day moving average is converging with price action, reinforcing the view of an emerging consolidation range.
– A break above the recent 1.3520-1.3550 resistance cluster could pave the way for a renewed bullish trend.
– Conversely, a drop below 1.3400 may invite further selling pressure
Read more on GBP/USD trading.