GBP/USD Faces Resistance at $1.30 as BoE Outlook and US Dollar Strength Collide

The British Pound (GBP) strengthened against the US dollar during the European trading session, with GBP/USD hovering near the $1.2970 mark.

This upward momentum was fueled by hawkish comments from Bank of England Monetary Policy Committee member Megan Greene, who indicated that monetary policy must continue addressing inflation despite recent declines.

Greene’s stance provided critical support for the Pound, helping offset pressure from the broadly bullish US dollar. Traders are now focused on upcoming economic events, including the BoE Governor’s speech and the release of the UK’s flash PMI data.

Looking at GBPUSD SELLS

Both the BoE and the Fed have started cutting interest rates, but recent US economic data has cooled down expectations for aggressive cuts, strengthening the US dollar in the process.$GBPUSD #forexsignals pic.twitter.com/pXZKs1pClZ

— Sovrenfx (@sovrenfx) October 23, 2024

Greene’s remarks highlight the ongoing concerns about inflation and the need for caution, suggesting that future interest rate cuts may not be as aggressive as expected. This view has traders anticipating BoE Governor Andrew Bailey’s speech, where any dovish tones could push the GBP lower. As the market awaits these key events, the Pound remains on edge, especially with the potential rate decisions in November.

US Dollar Strengthens Amid Political and Economic Uncertainty

On the other hand, the US dollar continues to strengthen amid ongoing political uncertainties, particularly with the US presidential election just weeks away. With Vice President Kamala Harris narrowly leading in the polls, market participants are bracing for the potential impact of a Republican win, which could introduce higher tariffs and shake global trade dynamics. Furthermore, the IMF’s upward revision of the US GDP growth forecast has added fuel to the dollar’s rally, increasing its safe-haven appeal.

The election uncertainty and Federal Reserve’s gradual policy shift toward easing have also reinforced the dollar’s strength. As a result, the GBP/USD pair remains under pressure as traders weigh the potential implications of political changes and economic data releases.

#GBPUSD: 1.2978 has been holding so far; a slight break now; if it does give away, the next target below is 1.2844; the BoE is now seen as the least dovish central bank now; let’s see if that hypothesis holds; if 1.2978 does hold, target is 1.3150; sell on rise pic.twitter.com/JXqEnjxnk4

— rajesh kazhipurath (@RajeshKaz) October 23, 2024

Technical Analysis: Resistance Looms at $1.30 for GBP/USD

Technically, GBP/USD is trading just below its pivot point at $1.3009, signaling a possible sideways trend in the short term. Immediate resistance is seen at $1.3071, with further resistance levels at $1.3124 and $1.3176. A break above $1.3071 could open the door to higher levels, but the pair has struggled to gain upward momentum.

On the downside, immediate support lies at $1.2949, with deeper support at $1.2898 and $1.2824. A breach below $1.2949 could indicate a deeper correction for the pair, possibly sending it towards the lower support zones. The Relative Strength Index (RSI) is currently at 44, suggesting neutral momentum, while the 50-day Exponential Moving Average (EMA) at $1.3026 indicates resistance to any bullish moves.

Key Takeaways for Traders:

• GBP/USD faces strong resistance at $1.3071, with support at $1.2949.

• Hawkish comments from BoE’s Megan Greene provided short-term support for the Pound.

• US dollar strength driven by political uncertainties and positive economic forecasts.

Traders should closely monitor upcoming BoE and US election-related events, as these could significantly impact the GBP/USD pair’s movement. A short position may be considered below $1.2949, with a take-profit target at $1.2898 and a stop-loss at $1.3076.