GBP/USD Forecast: Dollar rebounds from 14-month low

• The dollar recovered as investors sought safety amid rising tensions in the Middle East.

• Market participants are pricing in a 59% chance of another 50bps rate cut in November.

• The pound has gained about 5.4% against the dollar this year.

The GBP/USD forecast shows a sharp shift in sentiment to the bear as the dollar recovers from a 14-month low. At the same time, sterling was weak as recent economic data pointed to a weaker outlook.

–Interested in learning more about buying NFT tokens? Check out our detailed guide –

The dollar recovered against most currencies on Wednesday and Thursday as investors sought safety amid rising tensions in the Middle East. The conflict between Hezbollah and Israel in Lebanon has escalated, with the two groups exchanging missiles. The US and other partners have said they are working tirelessly to avoid an all-out war between the two.

Despite the dollar’s rebound, fundamentals point to several downsides. The Fed recently cut interest rates by 50 basis points, kicking off a long-awaited easing cycle. The rate cut sent the dollar to new lows before recovering. However, the US central bank has signaled more interest rate cuts to come. As a result, market participants are pricing in a 59% chance of another 50bps rate cut in November.

However, incoming data will continue to shape this outlook. The next major report is the core PCE index, which will show the state of inflation. Market participants will also be watching GDP data later today.

On the other hand, the pound sterling fell after data from the previous session revealed a significant drop in UK consumer sentiment. The figure fell from -8 to -21 in September. Moreover, it came after weak business activity data showed a slowdown in the economy. However, the pound has gained around 5.4% against the dollar this year as the Bank of England holds off on cutting interest rates.

Key GBP/USD events today

• Final US GDP t/t
• US Jobless Claims
• Fed Chairman Powell speaks

GBP/USD Technical Forecast: Solid Bear Momentum

Technically, GBP/USD is trading in a tight bullish channel with clear support and resistance lines. The price recently dropped to channel support after failing to sustain a move above the key 1.3400 level.

-Looking for the best CFD broker? Check out our detailed guide –

The decline stopped at the support line, which coincides with the 30-SMA. Therefore, it could bounce higher to make a new high above 1.3400. However, if the bears are strong enough to break below the support area, the price could review the 1.3200 support level.

Want to trade forex now? Invest at eToro!

67% 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.