Gbpusd pair in consolidation ahead of key UK economic events and US interest rate outlook adjustments

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.02%	-2.4 Pips
Week to-date	0.53%	69 Pips
March	3.39%	426.6 Pips

Upcoming key events (London Time)

Thu 07:00 AM GBP Labour Force Survey Employment Change
Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)

What happened lately

In the United States, the Federal Reserve has adjusted its interest rate projections, depicting a generally moderate stance. The interest rate projection for the first year was revised downward to 3.4%, compared to a prior forecast of 3.9%. This reflects a more dovish outlook on economic conditions. The second-year projection also saw a reduction, decreasing to 3.1% from the previous 3.4%. For longer-term projections, the interest rate remains unchanged at 3%, suggesting stability in the expectations for the distant future. The actual Federal Funds Rate is currently steady at 4.5%, with no changes from prior announcements. Such decisions indicate that the Federal Reserve is potentially taking a cautious approach to tightening monetary policy, possibly due to changing circumstances in economic growth and inflationary pressures.

In the United Kingdom, market participants are focusing on the upcoming high-impact economic releases that could influence the GBP pairs. On Thursday, the Labour Force Survey Employment Change will be released at 07:00 AM, which will provide insight into the health of the employment market in the UK. Additionally, at 12:00 PM, the highly anticipated Bank of England Interest Rate Decision will be announced. Expectations surrounding these events will likely generate volatility in the foreign exchange market, particularly affecting the GBPUSD exchange rate. These figures are crucial as they can signal potential changes in economic policy and the broader economic environment in the UK.

The GBPUSD pair saw slight movement with a decrease of 0.02% to 1.29990 on Wednesday, indicating a period of consolidation. The updated interest rate projections from the US may suggest a weaker outlook on the dollar, but the imminent key economic indicators and the interest rate decision from the UK will largely steer the pair’s direction moving forward. Investors may hold a cautious stance leading up to these announcements, potentially tightening trading ranges in anticipation of clearer cues on monetary policy. The outcome of the UK events, particularly the Bank of England’s interest rate decision, could provide significant bearings for the pair, with potential implications depending on whether the UK moves to adjust rates upwards or maintain the status quo amidst inflation and growth concerns.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday dropped -0.02% to 1.29990. Price is above 9-Day EMA while Stochastic is rising in overbought zone.

Updated daily direction for GBPUSD looks mixed as the pair is likely to consolidate above 1.29953 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.30051 or trades above daily pivot 1.30002. Break above could target R1 at 1.30039. While to the downside, we are looking at 1.29953 (S1) and daily low of 1.29965 as support levels. GBPUSD need to break on either side to indicate a short-term bias. A close below 1.29965 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bullish as the pair continued to trade higher and is up by 0.53% over the past few days.

Key levels to watch out:

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