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GBP to USD Forecast: Bank of England’s No Rate Cut Discussion Stand and FOMC Insights

By:
Bob Mason
Published: Nov 21, 2023, 06:55 GMT+00:00

Tuesday's focus: Bank of England's Treasury Select Hearing and US FOMC Meeting Minutes, shaping GBP/USD sentiment.

GBP to USD Forecast

Highlights

  • The GBP/USD gained 0.41% on Monday, ending the session at $1.25041.
  • Bank of England Governor Andrew Bailey continued to dismiss rate cut talks, supporting buyer demand for the Pound.
  • On Tuesday, the UK Treasury Select Hearing on the November Monetary Policy Report and the FOMC Meeting Minutes are focal points.

The Monday GBP/USD Overview

On Monday, the GBP/USD gained 0.41%. After a 0.32% rise on Friday, the GBP/USD ended the day at $1.25041. The GBP/USD fell to a low of $1.24461 before rising to a high of $1.25175.

Bank of England Treasury Select Hearing in Focus

The Bank of England (BoE) will be in the spotlight on Tuesday. BoE Governor Andrew Bailey and Monetary Policy Committee members Sir Dave Ramsden, Jonathan Haskel, and Catherine Mann will attend the Treasury Select Hearing on the November Monetary Policy Report.

Recent UK inflation and retail sales figures eased pressure on the BoE to raise interest rates higher. A deteriorating macroeconomic environment has led to speculation about a BoE rate cut in H1 2024.

While the BoE may attempt to avoid discussing rate cuts, views from BoE Gov. Andrew Bailey could be pivotal. On Monday, the BoE Governor reiterated it is far too early to discuss rate cuts.

There are no UK economic indicators for investors to consider.

FOMC Meeting Minutes in Focus

On Tuesday, US existing home sales and Chicago Fed National Activity Index (CFNAI) numbers will draw investor interest. A larger-than-expected fall in the CFNAI could support bets on a May Fed rate cut. Economists forecast the CFNAI to fall from 0.02 to -0.01 in October.

While the numbers will draw interest, the FOMC Meeting Minutes will be the focal point. FOMC member requirements for a Fed rate cut would need consideration. However, a hawkish tone could have a limited impact on buyer appetite for the US dollar. US inflation and retail sales figures fueled bets on a May Fed rate cut. The reports came after the last FOMC meeting.

Short-Term Forecast

Near-term GBP/USD trends hinge on BoE and Fed monetary policy forward guidance. The BoE Treasury Select hearing and FOMC Meeting Minutes could support further GBP/USD gains. However, private sector PMI numbers may suggest a BoE first move in cutting interest rates. The UK PMIs are out on Thursday, and the US numbers on Friday.

GBP to USD Price Action

Weekly Chart sends bullish near-term price signals.
GBPUSD 211123 Weekly Chart

Daily Chart

The GBP/USD held above the 200-day and 50-day EMAs, sending bullish price signals.

A GBP/USD return to $1.25500 would support a move toward the $1.28013 resistance level.

BoE commitment to maintain interest rates at current levels and dovish FOMC Meeting Minutes would fuel buyer demand for the GBP/USD.

However, a GBP/USD drop below the $1.25 handle would support a fall to the $1.24410 support level.

The 14-period daily RSI reading of 65.84 indicates a GBP/USD move to $1.26 before entering overbought territory.

GBP to USD Daily Chart EMAs send bullish price signals.
GBPUSD 211123 Daily Chart

4-Hourly Chart

The GBP/USD remained above the 50-day and 200-day EMAs, affirming bullish price signals.

A GBP/USD return to $1.25500 would support a return to the $1.26 handle.

However, a fall below the $1.25 handle would give the bears a run at the $1.24410 support level.

The 14-period RSI on the 4-hour Chart at 70.97 shows the GBP/USD in overbought territory. Selling pressure could intensify at $1.25500.

GBP to USD 4-Hourly Chart EMAs affirm bullish price signals.
GBPUSD 211123 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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