Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3350.
Add a stop-loss at 1.3100.
Timeline: 1-2 days.
Bearish view
Sell the GBP/USD pair and set a take-profit 1.3100.
Add a stop-loss at 1.3350.
The GBP/USD pair rose slightly after the US published mixed economic numbers last week that lowered the possibility of the Federal Reserve hiking interest rates. After bottoming at 1.3181, the pair rebounded to 1.3241 as focus now shifts to the upcoming Federal Reserve minutes of the last meeting.
Odds of Federal Reserve Rate Hike Falls
The GBP/USD pair has been in a strong downward trend in the past few weeks as odds of the Federal Reserve hiking interest rates rose. Officials decided to hike rates by 0.25% in the last meeting, with most of them signaling that they will support hiking later this year.
However, recent data shows that officials may not be in a hurry to hike this year. A report released on Wednesday showed that the headline and core PCE were softer than expected. This weakness was, however, because of a change of how the figure is calculated.
Another report released on Friday showed that the labor market was relatively soft last month. The economy created just 29,000 jobs in September, much lower than the 85k that analysts were expecting. The Bureau of Labor Statistics (BLS) also lowered the previous month’s job additions from over 162k to 133k. Also, the unemployment rate rose from 4.1% to 4.2%.
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In other words, the report was significantly worse than expected in all measures, including wages. As a result, odds that the bank will hike interest rates later this month have continued falling on Polymarket and Kalshi.
The next important catalyst for the GBP/USD pair will be the upcoming minutes of the Federal Reserve’s last meeting. These minutes will provide more insights into the last meeting and what officials deliberated.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair slumped from the August high of 1.3675 to a low of 1.3181 last Friday. This was its lowest level since June 26 this year. It remains between the lower and middle lines of the Bollinger Bands.
The pair has also remained below the 50-day and 100-day moving averages and the Supertrend indicators. Additionally, the Average Directional Index (ADX) has continued rising and is now at 37, its highest level since August. Therefore, the pair will likely resume the uptrend as odds of the Fed hiking interest rates fall. This may see it rebound to 1.3350. A drop below the support level of 1.3181 will invalidate the bullish outlook.
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