GBP/USD Surges to 1.30 as Weak US Dollar and BoE Policy Shift Stir Markets

https://twitter.com/tradingdotcom/status/1853415800553488514

The greenback’s retreat follows the latest Des Moines Register/Mediacom Iowa Poll showing Democratic candidate Kamala Harris with a three-point lead over former President Donald Trump, introducing uncertainty into US markets.

Alongside election concerns, the Federal Reserve’s anticipated rate decision on Thursday is another factor weighing on the Dollar.

Analysts expect a more modest cut of 25 basis points this time, after September’s 50-basis-point reduction, with investors seeking guidance on future rate policies, particularly for December.

Bank of England Rate Decision Could Boost GBP/USD Further

On the UK side, the BoE’s upcoming rate decision could add momentum to the GBP/USD pair. The central bank is expected to lower interest rates by 25 basis points, bringing them to 4.75%.

Most members of the Monetary Policy Committee (MPC) are reportedly in favor of this move, with a 7-2 voting split likely. External member Catherine Mann remains one of the two who advocate keeping rates steady at 5.00%, favoring a more cautious approach.

This policy divergence between the US and UK, combined with dollar weakness, sets a favorable backdrop for the Pound. If the BoE signals a dovish stance while the Fed maintains a cautious tone, GBP/USD could see further gains as investors turn to Sterling for potential yield advantage.

EUROPE CLOSED. EU stocks📉. EURUSD consolidating losses sub Year Pivot 1.020. GBPUSD consolidating losses sub 1.30. 📉📉

🗝️EURGBP holds 0.83 support. 📈

EUR (& #BTC) strongest major currency this week.
JPY weakest.#forex

— PipTra!n 🌴🥥 (@piptrain) November 1, 2024

GBP/USD Technical Outlook: Key Levels to Watch

The GBP/USD pair is currently flirting with a pivotal level at $1.29954. A sustained break above this point could clear the way for immediate resistance at $1.30108, with additional resistance levels at $1.30262 and $1.30431.

Should GBP/USD surpass these thresholds, the pair may continue its bullish trend, especially if it holds above the 50-day Exponential Moving Average (EMA) at $1.29315.

However, with the Relative Strength Index (RSI) at 64, the pair is close to overbought territory, suggesting that any rally could be capped without a decisive breakout.

On the downside, immediate support sits at $1.29674, with further support at $1.29473 and $1.29274. A drop below the $1.29674 level could trigger increased selling pressure, potentially pushing the pair toward the 50 EMA support line.

Key Takeaways:

• GBP/USD benefits from dollar weakness amid US election and Fed uncertainty.

• BoE rate decision on Thursday could add further bullish momentum to GBP.

• Key resistance lies at $1.30108, with support around $1.29674.

For traders, a move below $1.29954 might trigger selling, targeting $1.29531. However, if GBP/USD pushes above $1.30108, the outlook turns bullish, with an upper target of $1.30431 in the short term.