GBP/USD Analysis: waiting for Autumn Forecast Statement


Ahead of the announcement of the Autumn Statement by the British government, which is expected to impact the gains of the GBP/USD today. Recently, the currency pair moved towards the resistance level of 1.2560, the highest in two and a half months. Also, its gains primarily came amid a weakened US Dollar against other major currencies following the announcement of lower-than-expected US inflation rates, which negatively affected the outlook of the Federal Reserve's tightened policy.

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Monthly expectations for GBP/USD: The movement of the British Pound against the US Dollar seems excessive.

Recently, Pound Sterling rose to its highest level against the US Dollar in ten weeks, driven by the widespread weakness of the Dollar. However, the movement is beginning to appear exaggerated, according to one analyst. Meanwhile, the US Dollar faced pressure in November due to statements suggesting that the Federal Reserve likely raised interest rates and might start cutting rates early in the spring. However, according to Shin Stromat, an analyst at LGT Bank in Switzerland. He also added, "US Treasury yields for 10-year bonds fell to less than 4.4%, while the Dollar hovered around its lowest levels in two months against other major currencies." As observed in the forex market, the exchange rate of the Pound against the Dollar rose to 1.2540 on Tuesday, a level not seen since September 11.

Noteworthy, the Dollar weakness and global stock gains in recent weeks have been driven by three developments, according to Boris Kovacevich, an expert at Convera. Moreover, Central banks of the G3 chose not to raise interest rates in their recent meetings. Evidence suggests a slowdown in the US job market. In October, inflation surprised in the US, Eurozone, and the UK by falling. In general, markets will remain on alert for signs of continued slowing of the US economy, which could confirm Dollar selling. However, any upside surprises in future economic releases could reinforce expectations of Federal Reserve rate cuts, boosting US yields and the Dollar.

Nonetheless, this week is quiet for the United States, with no major data releases and Thanksgiving holiday shortening the week, meaning there is limited opportunity for a narrative shift in Favor of the Dollar. Thus, this suggests that more upside in GBP/USD is possible in the near term. Mark Haefele, a strategic expert at UBS Bank, said, "US Dollar selling seems exaggerated." Also, "A further significant Dollar weakness will require a sharp narrowing in economic growth and interest rate differentials between the United States and the rest of the world, and from our perspective, we do not see this happening soon, so we believe the market reaction to the US Dollar could be exaggerated."

GBPUSD Expectations and Analysis Today:

According to the performance on the daily chart below, the price of the British pound against the US dollar GBP/USD moved towards the resistance level of 1.2550, confirming the control of the bulls, and at the same time it may move the technical indicators towards strong levels of saturation with buying. I still prefer selling the British pound/dollar GBP/USD from every level. Bullish, and it will be best suited to do so without risk from the resistance levels of 1.2580 and 1.2640, respectively. On the other hand, over the same period, the GBP/USD pair declined towards the support level of 1.2370, a threat to the current bulls’ control.

Today, GBP/USD will be affected by the announcement of the British autumn statement. From the United States of America, durable goods orders, the number of weekly jobless claims, the American consumer confidence reading, and tomorrow there will be an American holiday. Obviously, the reaction today will be strong.

GBP/USD (Daily Chart)

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.