- GBP/USD is seen oscillating in a narrow trading band on the last day of the week.
- The less hawkish FOMC minutes continue to weigh on the USD and offer support.
- Relatively thin trading conditions hold back bullish traders from placing fresh bets.
The GBP/USD pair is seen oscillating in a narrow band through the early European session on Friday and consolidating this week's strong move up to the highest level since August 12. The pair is currently placed around the 1.2100 round figure and remains well within the striking distance of a technically significant 200-day Simple Moving Average (SMA).
The US Dollar struggles to gain any meaningful traction and languishes just above the monthly low, which, in turn, continues to act as a tailwind for the GBP/USD pair. A dovish assessment of the FOMC meeting minutes released on Wednesday continues to drag the US Treasury bond yields lower. This, along with a generally positive tone around the equity markets, is seen undermining the safe-haven greenback.
The British Pound, on the other hand, draws support from the recent sharp decline in the UK government bond yields. This represents an easing of financial conditions in the UK, which should allow the Bank of England to continue raising borrowing costs to tame inflation. The combination of the aforementioned fundamental factors supports prospects for a further near-term appreciating move for the GBP/USD pair.
That said, a bleak outlook for the UK economy might hold back traders from placing aggressive bullish bets amid a bleak outlook for the UK economy. It is worth recalling that the UK Office for Budget Responsibility (OBR) projected the UK GDP to slump by 1.4% next year as compared to a growth of 1.8% forecast in March. This, in turn, might cap gains for the GBP/USD pair amid lighter trading volumes.
Nevertheless, spot prices remain on track to register gains for the third successive week in the absence of relevant market-moving economic releases, either from the UK. The market focus now shifts to next week's important US macro data - the Prelim Q3 GDP report, Core PCE Price Index (the Fed's preferred inflation gauge) and the closely watched monthly employment details, popularly known as NFP.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD struggles around 1.2600 after BoE rate decision
GBP/USD retreated from its daily peak and battles around 1.2600 following the Bank of England monetary policy decision. The BoE kept the benchmark interest rate unchanged at 4.75% as expected, but the accompanying statement leaned to dovish. Three out of nine MPC members opted for a cut.
EUR/USD retakes 1.0400 amid the post-Fed recovery
EUR/USD is recovering ground to near 1.0400 in the European session on Thursday. The pair corrects higher, reversing the hawkish Fed rate cut-led losses. Meanwhile, the US Dollar takes a breather ahead of US data releases.
Gold price recovers from one-month low, retains modest gains above $2,600
Gold price attracts some haven flows in the wake of the post-FOMC sell-off in the equity markets. The Fed’s hawkish outlook lifts US bond yields and provides near-term support to XAU/USD. Market players await US GDP and employment-related data.
Aave Price Forecast: Poised for double-digit correction as holders book profit
Aave (AAVE) price hovers around $343 on Thursday after correcting more than 6% this week. The recent downturn has led to $5.13 million in total liquidations, 84% of which were from long positions.
Fed-ECB: 2025, the great decoupling?
The year 2024 was marked by further progress in disinflation in both the United States and the Eurozone, sufficient to pave the way for rate cuts. The Fed and the ECB did not quite follow the same timetable and tempo, but by the end of the year, the cumulative size of their rate cuts is the same: 100 basis points.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.