Upcoming macroeconomic and political events could affect GBPUSD

05 March 2024 80
Upcoming macroeconomic and political events could affect GBPUSD

The GBPUSD currency pair continues to correct upwards in a wide range on Tuesday, amid signs of imminent monetary easing in the US. Investors' attention is focused on the upcoming speeches of Federal Reserve (Fed) Chairman Jerome Powell in Congress, scheduled for Wednesday and Thursday.

 

Some other important economic publications that could influence the forecasts for the interest rate movement in the US are also expected this week. These include data from the Institute for Supply Management (ISM), the Job Openings and Labor Turnover Survey (JOLTS) and the non-farm payrolls report.

 

The latest data showed a slump in US industrial production in February and a gradual decline in inflation. At the same time, consumer sentiment remains weak.

 

As FRB Atlanta President Raphael Bostic said, the Fed sees no need for an urgent rate cut due to the "thriving" economy and labor market. However, he expressed concerns that inflation could remain above the 2% target.

 

Traders estimate the probability of monetary policy easing in the US in June at 65%, according to LSEG's IRPR app. 

 

The main event for the UK is expected on Wednesday. UK Finance Minister Jeremy Hunt will deliver his budget. Market expectations are that Hunt will use the budget to try to boost Prime Minister Rishi Sunak's falling rating by cutting taxes. At the same time, he should avoid causing investors new worries about the state of the government finances.

 

The GBPUSD pair is trading within a stable channel. On the H2 timeframe, the price has pulled back from the uptrend resistance, indicating a technical decline to the channel support. The Bears Power (standard values) indicates high selling sentiment.

 

Signal:

The short-term outlook for the GBPUSD pair is to sell.

The target is at the level of 1.2575.

Part of the profit should be fixed near the level of 1.2635.

A Stop loss should be placed near the level of 1.2740.

 

The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.

This content is for informational purposes only and is not intended to be investing advice.

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