{"id":43359,"date":"2024-12-16T05:15:49","date_gmt":"2024-12-16T05:15:49","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/gbp-usd-forecast-ahead-of-fed-boe-interest-rate-decision\/"},"modified":"2024-12-16T05:15:49","modified_gmt":"2024-12-16T05:15:49","slug":"gbp-usd-forecast-ahead-of-fed-boe-interest-rate-decision","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/gbp-usd-forecast-ahead-of-fed-boe-interest-rate-decision\/","title":{"rendered":"GBP\/USD forecast ahead of Fed, BoE interest rate decision"},"content":{"rendered":"

(Originally posted on : Invezz )<\/b>
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The GBP\/USD exchange rate continued its strong sell-off after last Friday\u2019s UK GDP data and as traders waited for the upcoming Federal Reserve and Bank of England decisions. The pair retreated to a low of 1.2630 on Monday, down from the month-to-date high of 1.2810.<\/p>\n

UK economic slowdown<\/h2>\n

There are signs that the UK economy is not doing well<\/a>. Data released on Friday showed that the economy contracted by 0.1% in October after contracting by 0.1% in the previous month. It was a weaker slowdown than the median estimate of 0.1%.<\/p>\n

This slowdown translated to a year-on-year growth of 1.3%, also lower than the median estimate of 1.6%. <\/p>\n

More data showed that the country\u2019s trade deficit widened to over \u00a318 billion in October from \u00a316.32 billion a month earlier. The deficit was also higher than the median estimate of \u00a316 billion.<\/p>\n

Another report showed that the UK manufacturing production dropped by 0.6% in October, a smaller drop from the previous minus 1.0%.<\/p>\n

Industrial production dropped by 0.7% during the month, while construction output slipped by 0.7% on a YoY basis.<\/p>\n

These numbers mean that the economy was still struggling, a trend that may continue in the comig months.<\/p>\n

Looking ahead, the Office of National Statistics (ONS) will publish the latest jobs numbers on Tuesday. Economists expect the data to show that the unemployment rate rose from 4.3% in September to 4.6% in October. The average earnings ex bonus is expected to come in at 5.0%. With bonuses, the index is expected to come in from 4.3% to 4.7%.<\/p>\n

These numbers will come a day before the ONS publishes the latest consumer price index (CPI) data. Economists polled by Reuters expect the data to show that the headline CPI rose from 2.3% to 2.6%. <\/p>\n

Core inflation, which excludes the volatile food and energy prices, is expected to move from 3.3% to 3.6%, a sign that inflation was moving in the wrong direction. It had dropped to below 2% a few months ago.<\/p>\n

Therefore, the Bank of England will be in a dilemma on Thursday since the UK has moved into a stagflation period. Stagflation is a situation where the economy is slowing at a time when inflation is rising.<\/p>\n

It is a big dilemma becaus a rate cut may stimulate the economy but also lead to higher inflation over time. <\/p>\n

Federal Reserve decision ahead<\/h2>\n

The GBP\/USD exchange rate will also react to Wednesday\u2019s Federal Reseve decision<\/a>. Economists expect that the Fed will slash rates by 0.25%, bringing the year-to-date cuts to 1%.<\/p>\n

The Fed is mostly concerned about the labor market at the expense of inflation. Data released this month showed that the unemployment rate rose from 4.1% to 4.2% even as the economy added over 200k jobs. These job additions were mostly because the hurricanes and the Boeing strikes ended.<\/p>\n

Like the Bank of England, the Fed is struggling to deal with the stubbornly high inflation rate. Recent data showed that the headline CPI rose to 2.7%, while the core CPI remained unchanged at 3.3%.<\/p>\n

Therefore, analysts expect a dovish tilt from the Fed as it cuts rates and points to more cuts in the coming months.<\/p>\n

GBP\/USD technical analysis<\/h2>\n
\"GBP\/USD\"<\/figure>\n

GBP\/USD chart by TradingView<\/a><\/p>\n

The daily chart shows that the GBP\/USD exchange rate has dropped to 1.2600, its lowest point since November 7. This decline happened after the pair formed a rising wedge pattern, a popular bearish sign.<\/p>\n

The GBP to USD pair has formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages crossed each other. Therefore, the pair will likely continue falling as sellers target the key support at 1.2500.<\/p>\n

The post GBP\/USD forecast ahead of Fed, BoE interest rate decision<\/a> appeared first on Invezz<\/a><\/p>\n

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(Originally posted on : Invezz ) The GBP\/USD exchange rate continued its strong sell-off after last Friday\u2019s UK GDP data and as traders waited for the upcoming Federal Reserve and Bank of England decisions. The pair retreated to a low of 1.2630 on Monday, down from the month-to-date high of 1.2810. UK economic slowdown There […]<\/p>\n","protected":false},"author":32,"featured_media":43360,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[37],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/43359"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/32"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=43359"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/43359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/43360"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=43359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=43359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=43359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}