The GBP/USD currency pair is experiencing a rebound during Thursday’s trading session amidst a slight decline in the US dollar. Investor sentiment has shifted as expectations rise for a potential 50 basis point rate cut by the Federal Reserve, coupled with a generally positive outlook in global markets that has placed pressure on the dollar. Additionally, the relatively hawkish position of the Bank of England is providing further support to the British pound ahead of upcoming comments from Fed Chair Jerome Powell.
The pair is currently trading around the 1.3335-1.3340 range, marking a recovery from a significant drop from nearly 1.3430, its highest level since March 2022. This recent upward trend reflects the upward momentum that GBP/USD has seen over the past two weeks. Despite pushback from various Fed officials regarding aggressive rate cuts, the market continues to anticipate a more substantial easing of monetary policy in November, thereby failing to bolster demand for the safe-haven US dollar.
In contrast, expectations for a slower rate-cutting cycle by the Bank of England compared to the US are lending support to the pound. Nevertheless, traders are likely to remain cautious and await further signals regarding the Fed’s monetary policy direction before making any significant moves. Observations from influential members of the Federal Open Market Committee, particularly Chair Powell, are anticipated to heavily influence market dynamics.
As the day progresses, traders will also be attentive to key economic indicators from the US, including the final Q2 GDP report, weekly jobless claims, and durable goods orders. These insights may present short-term trading opportunities and are likely to underscore the overall optimistic sentiment for GBP/USD . In this context, any notable corrective moves downward may be viewed as buying opportunities, with limited downside potential expected.
