GBP/USD. Analysis and Forecast

[Redator]

Today, Thursday, the GBP/USD pair is in demand, attracting buyers around 1.3585. As expected, the Federal Reserve lowered rates for the first time since December 2024 by 25 basis points, setting the overnight lending range at 4.00–4.25%. In addition, the regulator confirmed the need for two more rate cuts before the end of the year, given the weakening U.S. labor market. However, the market's initial reaction was short-lived after comments from Fed Chair Jerome Powell at the press conference.

Powell stated that inflation risks remain tilted to the upside, and the rate cut should be viewed as a risk management measure. He stressed that there is no need for rapid rate changes and that decisions will be made on a meeting-by-meeting basis. Following this, the U.S. dollar sharply recovered lost ground, rebounding from its lowest level since February 2022, which put pressure on GBP/USD in the second half of Wednesday.

However, dollar bulls failed to hold their ground, allowing GBP/USD to recover on Thursday. At the same time, the British pound is supported by the reduced likelihood of an immediate rate cut by the Bank of England. The Bank is expected to leave rates unchanged at today's meeting, citing concerns over high inflation. The Office for National Statistics (ONS) reported on Wednesday that annual CPI growth in the UK reached 3.8% in August, the highest since January 2024. At the same time, signs of cooling in the labor market preserve the possibility of future BoE easing. Nonetheless, these data sharply contrast with the Fed's dovish stance, which supports GBP/USD.

From a technical perspective, the breakout of strong resistance around 1.3600 this week and renewed buying interest on pullbacks have created a positive backdrop for GBP/USD bulls. Daily chart oscillators are positive and far from overbought territory, indicating a sustained uptrend and a strong likelihood of further growth toward the key 1.3700 level. The next targets are yesterday's high near 1.3725 and, if broken, intermediate resistance at 1.3745 on the way to the 1.3800 psychological level.

On the other hand, intraday support remains around 1.3585, which may keep prices from falling. If the decline continues, buyers are expected to emerge in the 1.3555–1.3550 range, which should act as strong support. However, if this zone is broken, technical selling will accelerate, pushing the pair toward the psychological 1.3500 level.

The material has been provided by InstaForex Company - www.instaforex.com