• The dollar fell Wednesday as investors absorbed the Fed’s policy meeting outcome.

• Powell maintained that the Fed’s next move would be a rate cut.

• British manufacturing fell in April.

The GBP/USD outlook remains optimistic as the pound holds strong against a faltering dollar. Recent remarks from Fed Chair Jerome Powell have increased the likelihood that the Bank of England will cut rates well ahead of the Federal Reserve.

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The dollar fell Wednesday as investors absorbed the Fed’s policy meeting outcome. The central bank held rates. However, policymakers were cautious due to the recent pause in the decline in US inflation. Notably, Powell said he was less confident that inflation would reach the 2% target. However, he maintained that the Fed’s next move would be a rate cut.

Therefore, investors who had expected a more hawkish speech were disappointed. There was no indication that the Fed would switch to rate hikes. Still, the outlook for rate cuts remains unclear. Moreover, Powell confirmed that the central bank would keep rates high until inflation resumed its downtrend. Investors still expect the first rate cut in September or December.

Meanwhile, data from the US revealed a more significant increase in private employment than expected, highlighting the still-high demand in the labor market. However, another report showed that vacancies fell more than expected. Meanwhile, there was a mixed picture of manufacturing data as well. However, these reports had little impact on prices as investors had their focus on the FOMC meeting.

Meanwhile, data from the UK revealed an unexpected drop in British house prices, indicating a decline in housing market activity. At the same time, British manufacturing fell in April, another sign that the recent economic recovery had paused.

GBP/USD key events today

• US jobless claims

GBP/USD technical outlook: Price struggles to sustain uptrend amid market pressure

On the technical side, the GBP/USD price is struggling to hold on to its uptrend. The price sits slightly above the 30-SMA and the RSI slightly above 50. However, bulls face a solid barrier. The uptrend has paused near a solid resistance trendline and the 1.2550 key level.

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Only an impulsive move could push above this resistance zone. In such a case, the price would climb to retest the 1.2701 key resistance level. On the other hand, if the resistance holds firm, the price will break below the 30-SMA and target the 1.2301 support level.

https://www.forexcrunch.com/blog/2024/05/02/gbp-usd-outlook-pound-holds-firm-against-weakening-dollar/