GBP/USD drops below 1.2400, defying speculations of imminent BoE rate hike next week


  • As US economic data strengthens the dollar, GBP/USD trades at 1.2397, slipping below its 200-day Moving Average.
  • Odds for a November rate hike by the Fed stand at 32.45%, while bets on a BoE rate hike toward 6% are scaled back.
  • With U.S. 10-year Treasury yields at 4.326% and a solid US economy, the BoE may be the first to blink and cut rates, pressuring GBP/USD further.

The Pound Sterling (GBP) continues to weaken against the US Dollar (USD) for the second consecutive day after a tranche of positive US economic data bolstered the Greenback. Hence, the GBP/USD is set to finish the week with losses, exchanging hands at 1.2397, below its 200-day Moving Average (DMA).

GBP/USD dips below its 200-day Moving Average as positive US data boosts the dollar, while the Bank of England faces a rate hike dilemma

Sentiment shifted sour, bolstering appetite for safe-haven assets, notably the US Dollar. Data revealed on Friday showed Americans’ inflation expectations were lowered, as demonstrated by the University of Michigan (UoM) poll. Inflation is expected to rise to 3.1% below August’s reading for one year, and it is projected at 2.7% for a ten-year period. Despite people’s high spirits, consumer sentiment dropped to 67.7, below forecasts of 69.1.

The US Federal Reserve earlier revealed that Industrial Production expanded 0.4% MoM, below July’s 1% but above the consensus forecasts. Further data released by the New York Fed showed its Empire State Manufacturing Index for September improved to 1.9 from a -21 figure in August, above forecasts of a -10 drop.

In the meantime, money market futures remain skeptical that the US Federal Reserve would hike rates once more before the year’s end, as shown by the CME FedWatch Tool. For the next week, the US central bank is projected to hold rates, and for November, odds for a 25 bps hike lie at a decent 32.45% chance.

Nevertheless, US Treasury bond yields advanced, as the latest inflation reports on the consumer and producer side revealed an uptick after decelerating sharply through the year. The US 10-year Treasury Note yields 4.326%, but the buck is losing some steam.

Across the pond, the Bank of England (BoE) is expected to raise rates by 25 bps, though it faces some challenges, like a slowdown in the economy. The Bank Rate would be lifted toward 5.50%, but traders scaled back previous bets the BoE would lift rates toward 6%, as odds for the November 2 meeting are around 15%.

The Fed would likely keep rates unchanged on the US front, but its economy remains solid, and investors are optimistic the US central bank would achieve a soft landing. Therefore, further downward action is expected in the GBP/USD, as monetary policy could suggest the BoE would be the first to blink and cut rates.

GBP/USD Price Analysis: Technical outlook

Since peaking at around 1.3140s, the major is in a downward trend, with the GBP/USD threatening to achieve a daily close below the 200-day Moving Average (DMA) at 1.2430, further reinforcing that sellers are in charge. Price action would put the May 25 swing low of 1.2308 into play before the pair nosedives toward the March 8 swing low of 1.1802. Contrarily, buyers must reclaim the 200-DMA and lift the exchange rate past the August 25 swing low of 1.2548 to remain hopeful of reaching higher prices.

GBP/USD

Overview
Today last price 1.2397
Today Daily Change -0.0012
Today Daily Change % -0.10
Today daily open 1.2409
 
Trends
Daily SMA20 1.2595
Daily SMA50 1.2742
Daily SMA100 1.2655
Daily SMA200 1.2432
 
Levels
Previous Daily High 1.2506
Previous Daily Low 1.2397
Previous Weekly High 1.2643
Previous Weekly Low 1.2446
Previous Monthly High 1.2841
Previous Monthly Low 1.2548
Daily Fibonacci 38.2% 1.2438
Daily Fibonacci 61.8% 1.2464
Daily Pivot Point S1 1.2368
Daily Pivot Point S2 1.2328
Daily Pivot Point S3 1.2259
Daily Pivot Point R1 1.2478
Daily Pivot Point R2 1.2547
Daily Pivot Point R3 1.2587

 

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD sits at yearly lows near 1.0550 ahead of EU GDP, US PPI data

EUR/USD sits at yearly lows near 1.0550 ahead of EU GDP, US PPI data

EUR/USD is trading near 1.0550 in the European session on Thursday, sitting at the lowest level in a year. The Trump trades-driven relentless US Dollar buying and German political instability weigh on the pair. Traders await EU GDP data and US PPI report ahead of Fed Chair Powell's speech. 

EUR/USD News
GBP/USD holds losses below 1.2700 on sustained US Dollar strength

GBP/USD holds losses below 1.2700 on sustained US Dollar strength

GBP/USD is holding losses near multi-month lows below 1.2700 in European trading on Thursday. The pair remains vulnerable amid a broadly firmer US Dollar and softer risk tone even as BoE policymakers stick to a cautious stance on policy. Speeches from Powell and Bailey are eyed. 

GBP/USD News
Gold price hits fresh two-month low as the post-election USD rally remains uninterrupted

Gold price hits fresh two-month low as the post-election USD rally remains uninterrupted

Gold price drifts lower for the fifth consecutive day and drops to its lowest level since September 19, around the $2,554-2,553 region heading into the European session on Thursday. The commodity continues to be weighed down by an extension of the US Dollar's post-election rally to a fresh year-to-date.

Gold News
XRP struggles near $0.7440, could still sustain rally after Robinhood listing

XRP struggles near $0.7440, could still sustain rally after Robinhood listing

Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.

Read more
Trump vs CPI

Trump vs CPI

US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis. 

Read more
Best Forex Brokers with Low Spreads

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures