The GBP/USD pair rose for three consecutive days and is nearing the important resistance level of 1.3420. It has now jumped by 2% from its lowest point this month. Focus now shifts to the upcoming Bank of England (BoE) interest rate decision and US nonfarm payrolls (NFP) data.
BoE Interest Rate Decision and US NFP Data
Sterling jumped as investors reacted to major events this week. A major one was John Healey’s budget reading, in which he revealed the spending and fundraising priorities for the government. The proposal included a smaller-than-expected levy for British banks like Lloyds and Barclays.
The GBP/USD pair also reacted to the latest Federal Reserve interest rate decision , which showed that two officials were supportive of future rate hikes. In his statement, Kevin Warsh lamented that inflation was very high and hinted that the bank should hike in its last interest rate decision of the year.
Now, focus shifts to the upcoming Bank of England interest rate decision. Economists expect the bank to hike interest rates by 0.25% in this meeting. Recent macro numbers from the UK support this view. The data showed that the UK economy continued growing last quarter, while inflation has moved further away from the bank’s 2% target.
More data showed that the labor market added more jobs than expected, a sign that the economy is doing well. Therefore, most analysts now expect that the bank will have capacity to hike interest rates by 0.25%.
The other crucial number to watch will be the upcoming US nonfarm payrolls (NFP) report on Friday next week. These will be important numbers because they will help the Federal Reserve when making its interest rate decision in December.
GBP/USD Technical Analysis
GBPUSD chart | Source: TradingView
The daily chart shows that the GBP/USD pair has rebounded this week. It has jumped in the last three consecutive days and is now nearing the important resistance level of 1.3420, its highest point earlier this month.
The pair has jumped to the upper side of the fixed range volume profile. Therefore, there is a risk that the pair will drop and retest the Point of Control level of 1.3375. This retreat will form a strategic entry for the pair. A move above the key resistance level of 1.3420 will confirm the bullish outlook and point to more gains, potentially to the key resistance level of 1.3500.
The post GBP/USD Forecast: Signal Ahead of BoE Interest Rate Decision, US NFP Data appeared first in UK on InvestingCube .
