GBP/USD Forecast – Pair Holds Steady Ahead of Powell’s Speech

GBP/USD Forecast – The British pound (GBP) is holding steady against the US dollar (USD) today, with GBP/USD trading at 1.2681, up 0.25% in early North American trading.

In the absence of significant UK economic data releases, all eyes are on Federal Reserve Chair Jerome Powell’s highly anticipated speech at the ECB forum in Sintra, Portugal. His remarks could provide critical insights into the future of US monetary policy, potentially sparking volatility in the currency pair.

Mixed Signals from UK Economic Data

Recent UK Purchasing Managers’ Index (PMI) data offers a mixed snapshot of the economy, highlighting both areas of resilience and concern:

• Manufacturing PMI: Stagnated at 50.9 in June, falling short of market expectations of 51.4. This signals limited growth in the manufacturing sector.
• Services PMI: While still in expansion territory, the services sector is showing signs of slowing, with forecasts predicting a reading of 51.2 for June.
• Construction PMI: The standout performer, rising to 54.7 in May—its highest level since May 2022—indicating robust activity in the construction industry.

Despite these figures, business confidence remains subdued amid ongoing uncertainty surrounding the upcoming UK election on July 4. Political instability and weak economic sentiment could weigh on the pound in the near term.

Powell’s Speech: A Potential Catalyst for GBP/USD Movement

Markets are eagerly awaiting Jerome Powell’s speech at the ECB forum, as it may provide clues about the Federal Reserve’s interest rate trajectory. According to the CME’s FedWatch Tool, there is currently a 60% probability of a September rate cut , reflecting growing expectations of easing monetary policy in the US.

Powell’s tone will be crucial:

• A hawkish stance , suggesting delays in rate cuts, could strengthen the USD, potentially pushing GBP/USD belowkey support levels.
• Conversely, a dovish tone, hinting at imminent easing, might weaken the USD, allowing the pound to gain traction above resistance levels.

Traders should also monitor upcoming US job data, which could further influence market sentiment and drive GBP/USD volatility.

Technical Analysis: Key Levels to Watch

For GBP/USD , the following technical levels are critical:

• Resistance: The pair recently tested 1.2661, with the next resistance level at 1.2690. A break above this could signal further upside momentum.
• Support: Immediate support sits at 1.2622, with stronger support at 1.2593. A drop below these levels could indicate bearish pressure.

What’s Next for GBP/USD?

As traders brace for Powell’s remarks, the currency pair remains sensitive to shifts in risk sentiment and monetary policy expectations. A dovish signal from Powell could bolster the pound, while a hawkish outlook may strengthen the dollar.

In conclusion, the GBP/USD forecast hinges on Powell’s speech and subsequent US economic data. With key technical levels in focus, traders should remain vigilant for potential breakouts or reversals. Whether the pound gains or loses ground will depend largely on the Fed’s stance and broader market dynamics.