GBP/USD Forecast: Consolidation to fresh lows, eyes on CPI

• Traders are still digesting last week’s events

• BoE Governor Andrew Bailey said the central bank could move to aggressive tapering.

• The US NFP report revealed an unexpected 254,000 new jobs in September.

The GBP/USD forecast shows a period of consolidation after the recent slide to new lows. Sterling remained weak after the BoE’s upbeat remarks last week. On the other hand, the dollar paused, holding on to gains after an upbeat US NFP report.

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Market participants were calm on Wednesday as prices settled into a slow start to the week. As a result, traders were still digesting last week’s events, which pressured the pound and boosted the dollar.

Last week, economic data and observations from policy makers pointed to an aggressive BoE and a gradual Fed. Bank of England Governor Andrew Bailey said the central bank could move to aggressive tapering depending on future inflation figures.

Meanwhile, most US economic reports last week showed a resilient economy. The biggest catalyst came on Friday, when the NFP report revealed an unexpected 254,000 new jobs in September. Moreover, the unemployment rate fell to 4.1%. As a result, market participants trimmed bets on a November rate cut, with futures suggesting a 25 bps rate cut. The dollar rose to a seven-week high, weighing on peers such as the pound sterling.

This week, the UK and US will release more economic data that will continue to shape the outlook for interest rate cuts. In particular, traders will be watching the UK GDP report on Friday, highlighting growth. Weaker-than-expected growth could put more pressure on the BoE to cut rates. Meanwhile, in the US, the FOMC minutes and the CPI report could contain clues about the Fed’s next policy moves.

Key GBP/USD events today

GBP/USD Technical Forecast: Bears show exhaustion after sharp decline

Technically, the GBP/USD price is in a tight consolidation, just above the 1.3051 support level. Meanwhile, the bearish trend remains intact, with the price below the SMA and the RSI below 50. After a sharp decline, the price stopped.

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However, the RSI is making higher highs, indicating exhaustion in the downtrend. If the bears have weakened, they may not be able to breach the 1.3051 support. Moreover, the bulls could reverse the trend by breaking above the SMA. However, if the bears take a short break, the price could soon start to make lower lows.

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