03 May 2024, GBP/USD
Event to pay attention to today:
15:30 GMT+3. USD - Nonfarm Payrolls
GBPUSD:
The GBP/USD pair is trading on a stronger note around 1.2540, following a weaker US Dollar (USD) on Friday during the early Asian session. US Federal Reserve (Fed) Chairman Jerome Powell delivered a subdued dovish message after Wednesday's meeting, which is weighing on the US Dollar. However, continued inflation and strong growth in the US should keep the Fed from raising rates and maintain an upward trend, which could support the dollar.
The Federal Reserve has decided to leave its key interest rate unchanged at its highest level in more than two decades, in the 5.25-5.5 per cent range, where it has been since July last year. The US central bank has acknowledged the worsening inflation outlook, citing a lack of further progress towards the 2% inflation target set by the Fed in recent months.
Powell emphasised that the next move from the Fed is unlikely to be a rate hike. He added that the timing of a rate cut will depend on the data, and that an unexpected weakening of the labour market could warrant a rate cut. On Friday, investors will be keeping a close eye on April's US non-farm payrolls (NFP) data. Should the data be weaker than anticipated, it could exert further pressure on the US dollar and create a tailwind for the GBP/USD pair.
Conversely, the Bank of England (BoE) will announce its interest rate decision next week. The BoE is anticipated to maintain the interest rate at 5.25% for the sixth consecutive time, while markets are fully priced in for a first rate cut in September. Market participants will be particularly attentive to developments in inflation and the timing of the Bank of England's first interest rate reduction.
Trade recommendation: Buy orders trading from the level of 1.2570
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