Market Analysis

GBPUSD

Prediction: Decline Expected

Fundamental Analysis:

The GBP/USD pair is experiencing slight losses, hovering around 1.2970 in the early Asian session on Tuesday. Meanwhile, the U.S. Dollar Index holds steady at approximately 104.30, just below its three-month peak of 104.57. Market participants appear cautious, awaiting significant U.S. economic reports scheduled this week. Positive recent U.S. economic data continue to highlight economic resilience, which supports the Dollar’s strength. The upcoming advanced Q3 GDP and October Nonfarm Payrolls data are key, as they may influence the likelihood of future Federal Reserve rate cuts; currently, the probability of a 25-basis-point rate cut in November is projected at 96.8%.

The U.S. presidential election and persistent geopolitical tensions in the Middle East may also bolster the Dollar’s safe-haven appeal. On the other hand, rising speculation that the Bank of England might implement rate cuts by year’s end could weigh on the Pound. Hawkish comments from BoE policymaker Catherine Mann, who noted that rate cuts would be premature due to ongoing wage-price pressures, may, however, provide some support for the Pound and curb its decline.

Technical Analysis:

The 4-hour chart’s Relative Strength Index is approaching 50, signaling a reduction in bearish momentum. The 100-day Simple Moving Average at 1.2970 serves as immediate resistance; a close above this level could attract technical buyers, with potential resistance levels at 1.3010 and 1.3060. Conversely, support is likely to be found in the 1.2900-1.2890 range, with further downside potential toward 1.2800.

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