**GBP/USD Price Forecast: Sterling Balances at 1.35 Ahead of Fed, Jobs Data**
*By James Stanley, TradingNews.com*
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**Overview**
The GBP/USD pair is stabilizing near the key 1.3500 level as traders worldwide await major economic events that could dictate the next phase of price action. These events include the highly anticipated US Federal Reserve meeting and a string of consequential jobs data releases from both the UK and US. Market participants are treading carefully, weighing central bank signals, inflation dynamics, and labor market strength to gauge GBP/USD’s trajectory through the remainder of the month.
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**Key Highlights:**
– Sterling trading near a significant support/resistance area at 1.3500
– US Federal Reserve policy meeting and Nonfarm Payrolls data in focus
– UK labor market and inflation metrics add to short-term GBP sensitivity
– Market volatility expected as central banks adapt to inflation pressures
– Technical indicators point toward critical junctures for both bullish and bearish setups
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**Recent GBP/USD Performance Recap**
The GBP/USD currency pair has been through volatile weeks, with the British pound experiencing sharp swings in response to global risk appetite, Covid-19 developments, and shifting monetary policy landscapes. Sterling saw a brief rally earlier in the year, climbing toward 1.3750 as hopes grew for robust UK growth amid a rapid vaccine rollout. However, risk-off flows, surging US Treasury yields, and growing confidence in the Federal Reserve’s potential for earlier tapering have all combined to blunt the pound’s advance.
Most recently, the pair settled into a holding pattern around 1.3500, with traders wary of placing fresh directional bets until after the week’s major data releases. Risk sentiment remains an underlying theme, but economic data surprises and central bank tone are now major upcoming catalysts for direction.
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**What’s Driving GBP/USD Right Now?**
Several pivotal factors are coalescing to drive the near-term fortunes of the GBP/USD pair:
1. **Central Bank Policy Outlook**
– The Bank of England (BoE) and Federal Reserve (Fed) are both facing surging inflation and robust (if uneven) economic recoveries.
– Market expectations of imminent BoE rate hikes have fluctuated, especially after the central bank opted for a more cautious approach in previous meetings.
– The Fed, for its part, has communicated a willingness to consider faster tapering of its asset purchases if inflation remains hot.
– Any surprise from either central bank has the potential to trigger breakouts in GBP/USD.
2. **US Dollar Strength**
– The US dollar index (DXY) has been buoyant, benefitting from its “safe haven” status as well as hawkish Fed commentary.
– The prospect of higher US interest rates and persistent inflation continue to underpin the dollar, weighing on major counterparts such as the pound.
3. **UK Economic Recovery**
– The UK is adjusting to a new normal post-Brexit and post-pandemic, with labor market tightness, supply chain issues, and consumer demand all playing roles.
– Recent data on jobs growth and wages has proven robust, but concerns linger about the sustainability of this momentum as fiscal support begins to wane.
4. **Global Risk Factors**
– Geopolitical tensions, Omicron variant headlines, and fluctuating energy prices all contribute to sudden risk-off episodes, often favoring the US dollar and adding downside pressure to GBP/USD.
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**Important Near-Term Events Impacting GBP/USD**
Traders and analysts are closely monitoring a trio of key events this week that could catalyze significant movement in the GBP/USD pair:
– **US Federal Reserve Meeting**
– The Fed’s stance on inflation and the pace of asset purchases is critical. Should officials hint at a more hawkish approach or provide a concrete timeline for rate hikes, the US dollar could surge, pushing GBP/USD lower.
– If the Fed adopts a more dov
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