GBP/USD Weekly Forecast: FOMC may spell trouble for the dollar

• The UK labor market has shown resilience, with jobless claims falling.

• US data showed higher-than-expected consumer and producer prices.

• Experts believe the US central bank will cut rates by 25 bps.

The GBP/USD weekly forecast supports a bullish trend as the FOMC meeting could lead to further weakness in the greenback.

GBP/USD Ups and Downs

The GBP/USD pair had an upbeat week after a mix of UK and US economic reports. In particular, the UK labor market has shown resilience, with jobless claims falling. Meanwhile, the economy stagnated with no growth, indicating a weaker-than-expected recovery.

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On the other hand, US data showed higher-than-expected consumer and producer prices, reducing the likelihood of a very large rate cut. As a result, the dollar rose. However, that changed late Thursday after reports indicated a 50 bps rate cut was a close call. The dollar fell, allowing the pound to close on an uptrend candle.

Next week’s key events for GBP/USD

Next week, high-impact events in the UK will include the Consumer Inflation and Retail Sales reports and the Bank of England policy meeting. Meanwhile, in the US, the market will focus on the FOMC meeting and retail sales data.

Experts believe the US central bank will cut rates by 25 bps. However, there is still uncertainty about this as some expect a more significant reduction. Therefore, there could be a lot of volatility in the markets on Wednesday. Meanwhile, the Bank of England may keep rates unchanged thanks to better-than-expected recent economic data. However, this outlook could change if inflation moderates more than expected.

GBP/USD Weekly Technical Forecast: Bulls reemerge at solid support zone

Technically, the GBP/USD price is in a developed uptrend with higher highs and higher lows. At the same time, the price traded mostly above the 22-SMA, a sign that the bulls are in the lead. Meanwhile, the RSI traded in bullish territory, touching the overbought region several times.

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The uptrend recently reached the critical resistance level of 1.3200, but the price failed to sustain a move above it. As a result, the bears took control, triggering a pullback to the 22-SMA support. The SMA coincided with the 1.3000 psychological level and the 0.382 Fib, creating a solid support zone. The price made a strong bullish candle, which shows that it could jump higher to retest the 1.3200 level. A higher high will strengthen the uptrend.

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