• Voting reveals that Trump will be the next US president.

• Data on Friday revealed a poor performance in the US labor market.

• The Bank of England will likely cut rates by 25-bps on Thursday.

The GBP/USD forecast turned to the downside after news outlets reported that Republican candidate Donald Trump won the election. Meanwhile, market participants prepared for a rate cut at the Bank of England policy meeting.

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Voting in the US on Wednesday revealed that Trump was in the lead and would likely become the next president. After weeks of speculation, market participants are more convinced that Trump’s policies will increase inflation. Therefore, the Fed might have a difficult time finishing its rate-cutting cycle.

After the election, the market focus will return to the state of the US economy and the FOMC policy meeting. Data on Friday revealed a poor performance in the US labor market. The US economy added just 12,000 new jobs in October, well below estimates of 106,000 additional jobs. However, the impact on the dollar was minimal because the unemployment rate remained steady. At the same time, experts noted that the slow job growth was due to disruptions caused by hurricanes.

Nevertheless, the report might shape the tone during the FOMC policy meeting. Before the data, policymakers had assumed a more hawkish tone, with some expecting the central bank to pause in December. If this tone remains, the dollar will rise. On the other hand, if the Fed signals another rate cut this year, the greenback will collapse.

Meanwhile, the Bank of England will likely cut rates by 25-bps on Thursday. This outlook follows recent figures showing inflation at 1.7%, below the central bank’s targets. However, most economists believe this might be the last rate cut for the year.

GBP/USD key events today

Market participants will keep digesting the US election results as there are no other high-impact reports.

GBP/USD technical forecast: Bulls give up control above 1.3000

On the technical side, the GBP/USD price has collapsed after failing to sustain a move above the 1.3000 key psychological level. Bulls had attempted to take charge. However, sentiment suddenly shifted when the price made a bearish engulfing pattern.

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A break below the 22-SMA has allowed bears to retest the 1.2850 support level. If bears maintain enthusiasm and the RSI stays below 50, the price will make a new low below 1.2850, continuing the previous downtrend.

https://www.forexcrunch.com/blog/2024/11/06/gbp-usd-forecast-pound-collapses-as-trump-secures-victory/