The Pound Sterling (GBP) is trading in a narrow range below the psychological resistance level of 1.3000 against the US Dollar (USD) during Tuesday’s London session. The GBP/USD pair is consolidating as investors brace for a series of crucial economic data from the United States, which will offer insights into the Federal Reserve’s (Fed) monetary policy outlook as the year draws to a close.
Key focus for investors this week includes the first estimate of Q3 Gross Domestic Product (GDP), the Personal Consumption Expenditure Price Index (PCE), the Nonfarm Payrolls (NFP), and the ISM Manufacturing Purchasing Managers’ Index (PMI). These indicators are expected to shed light on economic growth and inflation trends.
Recent comments from several Fed officials have indicated heightened concerns over downside risks to economic growth, while expressing confidence that inflation is on track to meet the central bank‘s target of 2%. Should the upcoming data indicate robust economic growth and strong labor demand, speculation around aggressive Fed rate cuts will likely subside. Conversely, signs of slower growth and a weak job market could reinforce expectations of rate cuts.
The CME FedWatch tool reveals that market participants anticipate a 25 basis point (bps) cut in interest rates during both the November and December policy meetings.
In the Tuesday New York session, attention will turn to the US Job Openings and Labor Turnover Survey (JOLTS) for September, scheduled for release at 14:00 GMT. Economists predict that US employers will report approximately 7.99 million job vacancies, a slight decline from August’s 8.04 million.
Market Update: Pound Sterling’s Cautious Stance Ahead of Key Announcements
The Pound Sterling is demonstrating a cautious performance against its major counterparts on Tuesday. Traders are awaiting the UK’s Autumn Forecast Statement, set to be announced on Wednesday, which will mark the first budget proposal from a Labour government in over 15 years.
UK Chancellor of the Exchequer Rachel Reeves is expected to announce tax increases and a boost in public spending, aligning with Prime Minister Keir Starmer’s recent comments in Birmingham. Starmer emphasized the need for “tough decisions” to raise taxes to avoid austerity and rebuild public services.
In addressing the National Health Service (NHS), Reeves underscored the need for substantial investment to enhance medical facilities, stating, “I am putting an end to the neglect and underinvestment that the NHS has faced for over a decade.”
Market participants are particularly attentive to these spending plans, as they will likely impact the Bank of England’s (BoE) interest rate trajectory. A recent Reuters poll suggests that the BoE is expected to implement a 25 basis point cut to 4.75% in its monetary policy meeting on November 7, marking the central bank’s second rate reduction this year after holding rates steady at 5% in September.
Technical Analysis: GBP/USD Consolidates Below 1.3000
The Pound Sterling is trading within Monday’s range against the US Dollar during European trading hours. The GBP/USD pair is approaching a critical juncture near the lower boundary of a Rising Channel chart formation around the 1.2900 level on the daily timeframe.
The near-term outlook for the pair remains uncertain, as it trades below the 50-day Exponential Moving Average (EMA) around 1.3070. The 14-day Relative Strength Index (RSI) has rebounded to nearly 40.00, with a fresh bearish momentum likely if it fails to surpass this threshold.
On the downside, the 200-day EMA near 1.2845 represents a significant support level for GBP bulls. Conversely, resistance is anticipated around the 20-day EMA at approximately 1.3060, indicating key levels to watch for traders.
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