GBPUSD poised for a breakout—traders should stay alert!
The GBPUSD pair, commonly known as “cable” among traders, reflects the exchange rate between the British pound and the US dollar. Economic conditions heavily influence the pair in both the UK and the US. The Pound usually depends on UK interest rate decisions, inflation data, and overall economic growth, with rising inflation often causing a rise in interest rates, which supports the Pound. The US Dollar, on the other hand, is influenced by Federal Reserve policy, inflationary trends, and US economic indicators such as employment and GDP growth. It is one of the important pairs in the Forex market, which is particularly interesting for trading!
Fed Interest Rate Decision, Sep 18, 20:00 (GMT+2)
The Federal Reserve is expected to cut interest rates from 5.50% to 5.25%. If this forecast is confirmed, it would signal a more accommodating monetary policy, likely weakening the US dollar, which could lead to a rise in the GBPUSD pair. However, if the rate cut is larger than expected or more dovish language accompanies the decision, the Dollar could weaken further, potentially pushing GBPUSD even higher. Conversely, if the Fed keeps rates unchanged, the US Dollar may strengthen as investors shift to higher-yielding US assets, causing GBPUSD to drop.
The US Fed last changed rates on July 26, 2023, from 5.25% to 5.50%. This initially led to an increase but a strong drop the next day.
US Federal Open Market Committee (FOMC) Statement, Sep 18, 20:00 (GMT+2)
The FOMC statement, released alongside the interest rate decision, will provide crucial guidance on future US monetary policy. If the statement confirms expectations of continued dovishness, with suggestions of more rate cuts or a cautious economic outlook, this would likely weaken the US Dollar further, leading to a potential rise in the GBPUSD pair. On the flip side, if the FOMC statement surprises with a more hawkish tone, stressing concerns about inflation or signaling fewer cuts in the future, the Dollar could strengthen, potentially causing a fall in GBPUSD.
UK Interest Rate Decision, Sep 19, 13:00 (GMT+2)
The Bank of England is expected to keep the interest rate at 5.00%. If this forecast is confirmed, the market reaction may be restrained, and GBPUSD may rise slightly. It is extremely unlikely that the Bank of England will raise rates in the near future, as inflation is steadily declining.
However, if the Bank of England cuts rates or adopts a dovish tone, the attractiveness of the pound will be greatly reduced, leading to a fall in GBPUSD.
In the Daily timeframe, GBPUSD, in a long-term bullish trend, has formed an expanding wedge pattern. The price bounced from the upper boundary and is consolidating near the 38.2 Fibonacci support. At the same time, the Stochastic indicates oversold.
If the price falls below the support at 1.3050, the fall will be to the lower trendline at 1.2900, corresponding to 61.8 Fibonacci;
A rebound from support will bring GBPUSD back to resistance at 1.3260;
