GBP/USD Weekly Forecast: Bulls stall, preparing for Fed rate cut

• US employment figures showed that the labor market is slowing.

• The US nonfarm payrolls report showed less-than-expected job growth in August.

• US inflation data will be the last major report before the Fed’s policy meeting.

The GBP/USD weekly forecast shows a temporary pause in a solid bullish trend as investors wait for the Fed’s first rate cut, while US NFPs provide no clear direction.

GBP/USD Ups and Downs

The pound had a bearish week, fluctuating amid mixed US economic data. Britain, meanwhile, provided few catalysts. Employment figures showed that the labor market is slowing. Vacancies fell more than expected and private sector job growth slowed.

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Meanwhile, the nonfarm payrolls report showed a smaller-than-expected increase in jobs in August. However, the unemployment rate remained steady at 4.2%. Meanwhile, data on business activity in the services sector showed a better-than-expected improvement, pointing to a resilient economy.

Next week’s key events for GBP/USD

Next week, investors will pay attention to UK employment and GDP data. Meanwhile, the US will release consumer and producer inflation data. Sterling has benefited in recent weeks due to expectations for fewer rate cuts in the UK compared to the US.

Therefore, if UK wage growth confirms fears that UK services inflation remains high, BoE rate cut expectations could ease, boosting sterling. Moreover, the pound would rise given the decline in the US labor market. The Fed is in a better position to start lowering borrowing costs.

Meanwhile, US inflation data will be the last major report before the Fed’s policy meeting. Weaker-than-expected numbers will increase the likelihood of a 50 bps rate cut.

GBP/USD Weekly Technical Forecast: Bullish trend breaks for short pullback

Technically, the GBP/USD price is in a bullish trend. Although the price is breaking through the 22-SMA, it has maintained an upward trajectory. This means it has made a series of highs and lows. At the same time, the RSI mostly traded above 50, supporting solid bullish momentum.

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Bulls recently broke above the critical resistance level of 1.3000. However, they failed to trade above the 1.3200 resistance, allowing the bears to take control. However, the uptrend remains intact as the price is still above the SMA. Therefore, the pullback will likely stop at the SMA and bounce back higher. On the other hand, if it breaks through the SMA and the 1.3000 level, it could find support at the bullish trend line. A new high above 1.3200 will continue the uptrend.

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