**GBP/USD Price Forecast: Sterling Climbs to 1.3548 as Fed Cut Bets Weigh on Dollar**
*By TradingNews.com staff, adapted from the original article by TradingNews.com. For additional Forex insights and the latest market updates, visit TradingNews.com.*
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**Overview:**
– The British Pound (GBP) surged against the US Dollar (USD), with the GBP/USD pair reaching 1.3548 in recent trade.
– Diminishing expectations of further Federal Reserve rate hikes, and speculation about potential Fed rate cuts, have dampened the dollar’s appeal.
– The UK economic outlook, mixed but stabilizing, has also lent support to the pound.
– Market sentiment, central bank policy divergence, and upcoming economic data will be key catalysts for GBP/USD in the near term.
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### Sterling Strengthens as Dollar Softens
The GBP/USD currency pair has climbed steadily over recent sessions, touching 1.3548 as market participants evaluate the monetary policy divergence between the Bank of England (BoE) and the Federal Reserve. The rally in sterling comes amid increasing speculation that the Fed may be nearing the end of its tightening cycle—or even preparing to pivot to rate cuts in coming quarters.
**Key Drivers Supporting GBP/USD:**
– Dovish expectations for the Federal Reserve’s monetary policy
– Waning US Dollar strength as yield advantage diminishes
– Stabilization in UK macroeconomic data
– Technical momentum and improved market sentiment towards risk-sensitive currencies
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### Fed Policy Outlook: Bets on Rate Cuts Grow
Earlier in the year, the Federal Reserve’s aggressive stance lifted the greenback across major currency pairs. However, several signals have prompted traders to dial back expectations for further Fed rate hikes:
– **Recent US Inflation Data:** Headline and core inflation numbers have shown signs of moderation, alleviating some concerns over runaway price pressures.
– **Fed Officials’ Comments:** Several FOMC members have indicated caution over tightening policy too far, citing risks to financial stability and economic growth.
– **Money Market Pricing:** Futures markets now imply an increased likelihood of a rate cut in late 2024, rather than further rate hikes through the year.
As a result, US treasury yields have pulled back from their cycle highs, reducing the yield differential that had favored the dollar. Investors seeking higher returns are increasingly looking beyond the greenback, while those worried about a US slowdown are hedging by diversifying into other G10 currencies.
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### UK Economic Picture: Mixed but Improving
In contrast to the US, the British economy has faced a series of headwinds in recent months, including lingering Brexit-related disruptions, weak business investment, and cost-of-living pressures. Nonetheless, a string of cautiously positive data releases has provided the pound with a platform for recovery.
**Recent UK Economic Highlights:**
– **GDP:** The UK economy has largely avoided a technical recession. Latest data reveal marginal GDP growth, with the services sector aiding overall output.
– **Inflation:** Double-digit inflation is moderating, albeit remaining above the Bank of England’s 2% target. This creates a delicate balancing act for policymakers.
– **Labor Market:** Unemployment rates remain low by historic standards. Wages have risen above inflation for the first time in over a year, boosting consumer confidence.
– **Consumer Sentiment:** Retail sales and confidence indices have ticked up, though consumer spending power is still capped by elevated food and energy costs.
The Bank of England, while careful in its forward guidance, has signaled it will keep rates elevated until it is confident that inflation pressures are sustainably lower. This stance, perceived as more hawkish relative to the Fed, has helped the pound enjoy a period of outperformance.
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### Technical Analysis: GBP/USD Breaks Resistance
On the technical front, GBP/USD’s advance to 1.3548 marks a significant bullish development.
– The pair broke through resistance at the 1.3500 level, which had capped rallies over
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