EUR/USD began the New York session near 1.1090
GBP/USD maintained its upward trend during the New York afternoon session, increasing by 0.6% to 1.3203. The pair continues to trade within Monday’s range, which saw a high of 1.3214 and a low of 1.3126. The pound has held firmly above key support levels, reflecting sustained bullish sentiment. The prospect of a 50-basis point (bp) rate cut from the Federal Reserve has provided additional fuel for the pound, keeping the pair well-supported. Sterling is now targeting its 2024 highs, with strong buyer interest apparent at these levels.
Key Technical Levels
- Support Levels:
- 1.3126: The lower bound of Monday’s trading range, serving as near-term support.
- Resistance Levels:
- 1.3214: The upper bound of Monday’s range, marking immediate resistance.
- 2024 Highs: GBP/USD could test these levels if the bullish trend persists.
Technical Indicators
- Bullish Momentum: GBP/USD’s sustained push above 1.3200 indicates continued upward strength, supported by expectations of a dovish Federal Reserve stance.
- Range-Bound Consolidation: The pair traded within a tight range on Monday, hinting at consolidation. As long as the support level at 1.3126 holds, the pair remains positioned for further gains.
Fundamental Analysis
Market sentiment is being heavily influenced by the growing anticipation of a 50bp Fed rate cut, with the probability of this move now reaching 60%. This dovish outlook has provided support to GBP/USD, as traders view the Bank of England (BoE) as relatively less dovish in comparison to the Fed. While expectations of a 25bp rate cut from the BoE have risen—from 20% to nearly 40%—this has not significantly dampened the pound’s momentum.
Upcoming Economic Data
The UK core CPI m/m report, due on Wednesday, is a key event that could impact GBP/USD. A consensus reading of 0.4% is expected, an increase from July’s 0.1%. If the inflation data surpasses expectations, it could bolster the pound further, reinforcing expectations of future BoE tightening.
Overall Outlook
GBP/USD is likely to extend its bullish momentum, driven by the dovish Fed stance and relatively hawkish BoE expectations. The UK CPI report could serve as a catalyst for further gains or a pullback, depending on the inflation outcome. For now, the pair remains well-supported and has the potential to challenge its 2024 highs in the near term.
