GBP/USD Forecast: Sterling maintains momentum near 2-year high

• The market’s focus is squarely on the prospect of US and UK rate cuts.

• The UK economy is doing better than expected, boosting the pound.

• The US will release GDP and PCE data this week.

The GBP/USD forecast shows a slight reversal of an upbeat trend, with the pound close to a two-year high in the previous session. The return to this peak came as markets bet on more rate cuts by the Fed than the Bank of England. Meanwhile, markets awaited US GDP and inflation data.

-Interested in learning about the live Forex calendar? Click here for details-

Sterling fell slightly on Wednesday after hitting a new high. The market’s focus is squarely on the prospect of US and UK rate cuts. According to bets, the Fed could implement cuts of 100 bps this year. Meanwhile, the Bank of England could cut by 40 bps after a 25 bps cut in August. At the same time, the UK economy is doing better than expected, boosting the pound.

On Friday, the BoE governor and the Fed chairman talked about rate cuts. Powell indicated that it was time for the Fed to start reducing borrowing costs as the labor market showed weakness. As a result, bets for a September cut increased, sinking the dollar.

On the other hand, Andrew Bailey warned against rushing to cut rates. He noted that it is too early to know whether the fight to tame inflation is over. As a result, rate cut expectations fell and sterling rose.

However, the incoming data could change the outlook for UK and US policy. The US will release GDP and PCE data this week, which could change expectations.

Key GBP/USD events today

Trading is likely to stay that way as neither the UK nor the US will release any major reports.

GBP/USD Technical Forecast: Bears take control as bulls show exhaustion

Technically, GBP/USD is pulling back after making a higher high. However, the trend remains bullish with price above 30-SMA and RSI above 50. Bulls maintained a steep price trend above SMA. It recently broke the resistance level 1.3150 and was heading towards the critical level of 1.3301. However, the journey to the 1.3150 level was difficult.

-Interested in learning about forex signals? Click here for details-

The RSI showed a slight bearish divergence, indicating exhaustion. As a result, the bears took over. However, the bullish trend will continue if the price remains above the SMA.

Want to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.