Pound sterling rebounds as traders scale back BoE Rate cut bets
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The Pound Sterling (GBP) has rebounded against major currencies after the UK budget announcement, as traders adjust their expectations for Bank of England rate cuts. The Office for Business Responsibility raised inflation forecasts, prompting reduced bets on aggressive cuts. With the BoE’s meeting on November 7 and key U.S. economic data ahead, market sentiment is shifting.
Pound Sterling Rebounds as Traders Scale Back BoE Rate Cut Bets
The Pound Sterling (GBP) surged against its major peers following the latest UK budget announcement, with a shift in market sentiment toward the Bank of England’s (BoE) potential rate moves. Traders began reducing expectations of aggressive rate cuts as the Office for Business Responsibility (OBR) raised inflation forecasts for 2024 and 2025. In parallel, the United States is set for a busy economic data calendar, particularly with the upcoming Nonfarm Payrolls (NFP) report, which could influence the Fed’s stance on future rate cuts.
UK Budget Highlights and Inflation Forecast Adjustments
In the first Autumn Forecast Statement from Labour’s Rachel Reeves, the UK budget outlined significant tax increases, the largest in almost three decades. Aiming to fund key areas like the National Health Service (NHS) and green energy projects, Reeves’ policies garnered investor attention, particularly as these higher tax contributions are projected to raise over £40 billion. This update prompted the OBR to adjust inflation expectations to 2.5% in 2024 and 2.6% in 2025, which influenced the outlook for BoE’s rate policies. With the BoE’s next policy meeting scheduled for November 7, investors now expect a more cautious approach, with a forecasted rate cut of 25 basis points (bps) to 4.75% instead of a steeper reduction.
GBP/USD Edges Higher as US Dollar Softens Ahead of Economic Data
In Thursday’s London session, GBP/USD advanced towards the 1.3000 level as the US Dollar softened, awaiting economic indicators like the Personal Consumption Expenditure (PCE) Index, core inflation, and Friday’s NFP report. The US Dollar Index (DXY) hovers around the 104.00 level, slightly weaker following mixed US GDP growth and a stronger-than-expected ADP Employment report. While the ADP data showed private payrolls at 233,000, far above the previous month’s 159,000, the third-quarter GDP data hinted at cooling momentum. Investors will closely monitor the NFP figures, with projections at 115,000 new jobs for October. Should this signal a weaker labor market, dovish bets on the Fed’s forthcoming rate cuts may strengthen.
Technical Outlook: Key Levels for GBP/USD
The technical setup for GBP/USD remains tentative near the 1.3000 resistance. The pair struggles to maintain momentum above this threshold, influenced by a 50-day Exponential Moving Average (EMA) resistance at 1.3060. On the downside, support forms near the lower bound of a rising channel at approximately 1.2900. With the 14-day Relative Strength Index (RSI) holding around the 40.00 level, sustained bullish momentum could materialize if RSI breaks higher. Primary support for GBP/USD aligns near the 200-day EMA around 1.2845, while a breach above the 50-day EMA at 1.3060 could open a path toward further gains for the Pound.
Pound Sterling Rebounds as Traders Scale Back BoE Rate Cut Bets
The Pound Sterling (GBP) surged against its major peers following the latest UK budget announcement, with a shift in market sentiment toward the Bank of England’s (BoE) potential rate moves. Traders began reducing expectations of aggressive rate cuts as the Office for Business Responsibility (OBR) raised inflation forecasts for 2024 and 2025. In parallel, the United States is set for a busy economic data calendar, particularly with the upcoming Nonfarm Payrolls (NFP) report, which could influence the Fed’s stance on future rate cuts.
UK Budget Highlights and Inflation Forecast Adjustments
In the first Autumn Forecast Statement from Labour’s Rachel Reeves, the UK budget outlined significant tax increases, the largest in almost three decades. Aiming to fund key areas like the National Health Service (NHS) and green energy projects, Reeves’ policies garnered investor attention, particularly as these higher tax contributions are projected to raise over £40 billion. This update prompted the OBR to adjust inflation expectations to 2.5% in 2024 and 2.6% in 2025, which influenced the outlook for BoE’s rate policies. With the BoE’s next policy meeting scheduled for November 7, investors now expect a more cautious approach, with a forecasted rate cut of 25 basis points (bps) to 4.75% instead of a steeper reduction.
GBP/USD Edges Higher as US Dollar Softens Ahead of Economic Data
In Thursday’s London session, GBP/USD advanced towards the 1.3000 level as the US Dollar softened, awaiting economic indicators like the Personal Consumption Expenditure (PCE) Index, core inflation, and Friday’s NFP report. The US Dollar Index (DXY) hovers around the 104.00 level, slightly weaker following mixed US GDP growth and a stronger-than-expected ADP Employment report. While the ADP data showed private payrolls at 233,000, far above the previous month’s 159,000, the third-quarter GDP data hinted at cooling momentum. Investors will closely monitor the NFP figures, with projections at 115,000 new jobs for October. Should this signal a weaker labor market, dovish bets on the Fed’s forthcoming rate cuts may strengthen.
Technical Outlook: Key Levels for GBP/USD
The technical setup for GBP/USD remains tentative near the 1.3000 resistance. The pair struggles to maintain momentum above this threshold, influenced by a 50-day Exponential Moving Average (EMA) resistance at 1.3060. On the downside, support forms near the lower bound of a rising channel at approximately 1.2900. With the 14-day Relative Strength Index (RSI) holding around the 40.00 level, sustained bullish momentum could materialize if RSI breaks higher. Primary support for GBP/USD aligns near the 200-day EMA around 1.2845, while a breach above the 50-day EMA at 1.3060 could open a path toward further gains for the Pound.