**GBP/USD Price Forecast: Sterling Balances at 1.35 Ahead of Fed and Jobs Data**
*Based on an article by Matt Weller, TradingNews.com*
The GBP/USD currency pair, commonly referred to as Cable, holds a critical position in the foreign exchange market, driven not only by economic fundamentals but also by broader market sentiment and expectations around central bank policy. As the pair hovers near the psychologically significant 1.35 level, traders are closely watching upcoming economic events from both sides of the Atlantic, particularly as the Federal Reserve prepares to release new statements and critical US labor market data looms. This article analyzes the recent price action, key drivers, and potential scenarios for GBP/USD in the days ahead.
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### Recent Price Action and Technical Overview
GBP/USD has witnessed a period of relative stability around the 1.35 mark, with intraday volatility tempered by a lack of immediate market catalysts. Traders are maintaining a cautious stance ahead of critical economic data releases. The pair’s current posture at 1.35 reflects a balance of forces, with market participants weighing divergent economic narratives and central bank policy signals.
#### Key Technical Levels
The technical landscape provides substantial insight into Cable’s near-term prospects:
– **Support Levels:** The most immediate support for GBP/USD lies just below at the 1.3450 area. This zone was tested recently, with buying interest emerging each time the pair approached this threshold. A decisive breach could open up declines toward the 1.3400 psychological level, with further support at the late-2021 lows around 1.3300.
– **Resistance Levels:** On the upside, a move above the 1.3550 region could trigger a push toward 1.3600. Beyond this, the 1.3700 handle stands as a formidable resistance barrier, coinciding with the 200-day moving average and representing a key congestion zone observed earlier in the year.
– **Indicators and Momentum:** Most short-term moving averages are clustered near the current price, revealing the pair’s consolidative state. Momentum indicators such as RSI are neutral, suggesting the market is awaiting new impetus.
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### Fundamental Drivers: UK and US Perspectives
#### UK Macro and Bank of England Outlook
The British pound’s recent resilience has been underpinned by a combination of factors:
– **Economic Recovery:** Data from the UK has, on balance, confirmed a robust rebound in activity following the earlier stages of the pandemic. GDP growth remains solid, although the pace of expansion is moderating relative to its 2021 highs.
– **Inflation Concerns:** Like many economies, the UK faces mounting inflationary pressures, with the Consumer Price Index (CPI) rising above the Bank of England’s (BoE) target. This development has thrust the BoE into the spotlight, as market participants speculate on the timing and magnitude of further interest rate hikes.
– **Policy Uncertainty:** Although the Bank of England has initiated a tightening cycle, uncertainty surrounds the pace of future hikes. Mixed messages from BoE policymakers have contributed to short-term volatility, as traders reassess the policy outlook with each new data point.
#### US Fundamentals and the Federal Reserve
Across the Atlantic, the dollar’s story is dominated by expectations around Federal Reserve policy normalization:
– **Labor Market Strength:** The US jobs report, particularly Non-Farm Payrolls (NFP), remains the marquee data release for dollar traders. Recent readings have shown a labor market moving steadily toward full employment, supporting the thesis that the Federal Reserve could pursue a more aggressive course of policy tightening.
– **Inflation Dynamics:** US inflation has surged above target, triggering debates within the Federal Reserve about the appropriate response. Recent speeches by Fed officials have underscored the case for ongoing rate hikes, though the timing and speed remain contentious topics.
– **Fed Policy Meetings:** All eyes are on upcoming FOMC meetings, where policymakers are expected to signal the next phase of normalization. Forward guidance from
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