• Market focus is squarely on the rate cut outlook in the US and the UK.

• The UK economy is doing better than expected, boosting the pound.

• The US will release GDP and PCE data this week.

The GBP/USD forecast shows a slight pullback in a bullish trend, with the pound near a two-year high hit in the previous session. The rally to this peak came as markets bet on more rate cuts by the Fed than the Bank of England. Meanwhile, markets awaited US GDP and inflation data.

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Sterling eased slightly on Wednesday after reaching a new peak. Market focus is squarely on the rate cut outlook in the US and the UK. According to bets, the Fed might implement 100 bps in cuts this year. Meanwhile, the Bank of England might cut by 40 bps after a 25 bps cut in August. At the same time, the UK economy is doing better than expected, boosting the pound.

On Friday, the BoE Governor and Fed Chair spoke about rate cuts. Powell indicated it was time for the Fed to start lowering borrowing costs because the labor market had shown weakness. As a result, bets for a September cut rose, sinking the dollar.

On the other hand, Andrew Bailey cautioned against rushing to cut rates. He noted that it was too early to know if the fight to tame inflation was done. Consequently, rate cut expectations fell, and the pound rose.

However, incoming data might shift the outlook for UK and US policy. The US will release GDP and PCE data this week, which might alter expectations.

GBP/USD key events today

Trading will likely remain this as neither Britain nor the US will release major reports.

GBP/USD technical forecast: Bears take over as bulls show exhaustion

On the technical side, the GBP/USD price is retreating after making a higher high. Nevertheless, the bias remains bullish, with the price above the 30-SMA and the RSI over 50. Bulls have maintained a steep price trend above the SMA. It recently broke above the 1.3150 resistance level and was heading for the 1.3301 critical level. However, the journey to the 1.3150 level was difficult.

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The RSI showed a slight bearish divergence, indicating exhaustion. As a result, bears have taken over. However, the bullish trend will continue if the price stays above the SMA.

https://www.forexcrunch.com/blog/2024/08/28/gbp-usd-forecast-pound-maintains-momentum-near-2-year-high/