GBP/USD Price Forecast: GBP Holds Above $1.34 Amid Fed Rate Cut Hopes and BoE Outlook

The GBP/USD currency pair remains steady near the 1.3400 level during the European session, as the US dollar continues to weaken.

This weakness is largely driven by investor anticipation that the Federal Reserve may implement another significant interest rate cut by the end of the year. The US Dollar Index (DXY) is hovering near 100.20, reflecting ongoing pressure on the dollar.

The Fed recently cut interest rates by 50 basis points (bps), placing them in the range of 4.75%–5.00%. Additionally, markets are pricing in a 75% chance of another rate cut by the Fed before year-end, which could further weigh on the US dollar and benefit GBP/USD.

$GBPUSD it resume higher from the 4-hour blue box area, which allows buyers to create a risk free long position in bullish sequence. #Elliottwave #Forex pic.twitter.com/NgskhMWbKb

— Elliottwave Forecast (@ElliottForecast) September 25, 2024

Bank of England’s Cautious Approach to Rate Cuts Supports GBP

Meanwhile, the Bank of England (BoE) is taking a more cautious approach to interest rate adjustments. BoE Governor Andrew Bailey has indicated that while rates are expected to trend downward, the cuts will likely be gradual. In contrast to the sharp rate reductions seen during the pandemic, Bailey assured that the current cycle of rate cuts would be measured, giving inflation time to stabilize.

Inflation remains a concern for the BoE, particularly in the services sector, where the Consumer Price Index (CPI) rose from 5.2% in July to 5.6% in August. This persistent inflation is a key reason why the BoE is reluctant to implement aggressive rate cuts, focusing instead on keeping inflation close to the target of 2%.

In Daily Technical Video Group 1, we said $GBPUSD should continue higher and pullback to find support in 3, 7, 11 swing against 9.23.2024 low at 1.32 #elliottwave #trading

— Elliottwave Forecast (@ElliottForecast) September 25, 2024

GBP/USD Technical Outlook: Key Levels to Watch

Currently, GBP/USD is trading at $1.33989, down 0.11%. The pivot point is at $1.33831, indicating that a break above this level could trigger bullish momentum, with immediate resistance at $1.34293. If the pair climbs past $1.34551 and $1.34885, a short-term trend reversal could be in play.

On the downside, support is seen at $1.33594, with further levels at $1.33310 and $1.32993. A break below these levels would signal a deeper pullback.

• RSI: Neutral at 53
• 50-day EMA: Positioned at $1.33655, providing key short-term support.

Traders are advised to enter long positions above $1.33831 with a take-profit target of $1.34280 and a stop-loss at $1.33591.