GBP/USD Struggles to Break Above 1.2700 as Markets Brace for Potential Fed Rate Cuts
GBP/USD made an attempt to rally above the key level of 1.2700 on Wednesday but ultimately closed the day just below it. The markets are currently in a state of uncertainty as they anticipate a possible double rate cut by the Federal Reserve in September. Despite concerns about a US recession, investors are showing limited interest in the currency pair.
Forex Today: Focus Shifts to US Labor Data
Investors are now turning their attention to the upcoming US labor data, as they try to gauge the health of the economy. With little significant economic data expected for the rest of the week, the focus remains on the possibility of a 50 basis point rate cut by the Fed next month.
Looking ahead, traders will be monitoring the UK labor figures, US Producer Price Index (PPI) inflation, as well as UK and US Consumer Price Index (CPI) inflation data. Additionally, the release of UK Gross Domestic Product (GDP) growth and US Retail Sales figures next week will provide further insight into the economic landscape.
Rate traders are currently pricing in a 50-basis-point rate cut in September, with additional cuts expected throughout 2024. The FedWatch Tool indicates an 83% probability of the Fed’s benchmark fed funds rate reaching 425-450 basis points by the end of the year.
Technical Analysis of GBP/USD
GBP/USD is hovering just above the 200-day Exponential Moving Average (EMA) at 1.2647, with buyers struggling to establish a bullish momentum. The currency pair has retreated nearly 3% from its recent highs in July, and long-term buyers are looking for a pattern of higher lows to sustain the pair’s upward trajectory.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world, dating back to 886 AD, and is the official currency of the United Kingdom. It accounts for a significant portion of global foreign exchange transactions and is influenced by factors such as monetary policy, economic data releases, and trade balance indicators.
Overall, the uncertainty surrounding the GBP/USD pair and the potential Fed rate cuts highlight the importance of staying informed about economic developments and market trends. Investors should closely monitor upcoming data releases and central bank decisions to make informed decisions about their investments.