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Fed Chairman’s Cautious Tone:
Impact on the GBP/USD Exchange Rate
GBP/USD Surges as the exchange rate made a strong surge on Thursday, hitting an intraday high of 1.2192. This upswing was triggered by the Federal Reserve (Fed) Chairman Jerome Powell’s comments, which had a significant impact on the US Dollar (USD). Powell’s remarks had a softening effect on the USD, causing the Dollar Index (DXY) to drop. As a result, the Pound Sterling (GBP) gained momentum, continuing its rebound from earlier lows near 1.2090.
Market Analysis and Technical Outlook:
Chairman Powell, during his appearance at the Economic Club of New York, struck a more cautious tone in his speech. He discussed the ongoing strength of the US economy and hinted that the pressure on the Fed to raise interest rates further was diminishing. Consequently, GBP/USD Surges, causing the US Dollar to weaken, and investors responded positively. Market sentiment shifted firmly into risk-on territory.
Over the next 24 hours, several Federal Reserve officials are scheduled to deliver speeches. This will occur before the central bank enters a “blackout” period in anticipation of its next policy meeting and rate call.
Read More: Fed Chair Jerome Powell Suggests Potential Rate Increases Amid Strong U.S. Economy
Retail Sales Data and GBP/USD Technical Analysis:
Looking ahead to Friday, the GBP is set to conclude the trading week with the release of UK Retail Sales data. GBP/USD Surges, yet median market forecasts suggest a potential decline in September’s Retail Sales. A negative growth of -0.1% is expected compared to August’s 0.4% increase.
Technical Analysis: GBP/USD Continues to Face Resistance
Despite the strong surge driven by the Fed’s comments, the GBP/USD pair remains entrenched in a bearish trend on the daily candlestick charts. GBP/USD Surges, and this surge comes after the pair failed to generate a sustained bull move since sinking to 1.2037 earlier this month. The last attempt to move up did not make a meaningful break of the 1.2300 handle.
GBP/USD Daily Chart
GBP/USD Surges; however, the pair continues to trade on the bearish side. The 50- and 200-day Simple Moving Averages (SMA) indicate a bearish cross around 1.2450.
If the bearish trend continues, the Pound Sterling may challenge the lows of 2023, reaching as low as 1.1800. On the other hand, a topside recovery will need to first mount and extend from the 1.2300 key level. This is particularly important as the 50-day SMA is set to drop into price action and add technical resistance.
For beginners, it’s essential to understand that currency values can be influenced by statements made by central bank officials, like Fed Chairman Jerome Powell. GBP/USD Surges in this case, Powell’s comments caused the US Dollar to weaken, which benefited the British Pound. However, the GBP/USD exchange rate has been on a downward trend for a while, and it’s currently facing resistance at the 1.2300 level. This means that the value of the Pound may struggle to rise significantly unless it breaks through this resistance level. Traders and investors are closely watching economic data and central bank statements for clues about the future direction of these currencies.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
