The GBP/USD price has seen recent gains capped at the 1.2845 resistance level, settling lower around 1.2785 as bulls lose momentum. The positive outcome of Britain’s parliamentary elections has provided support for the GBP/USD price, signaling a new political era for the economy. Traders anticipate the Labor Party to fulfill its election promises to bolster the domestic economy, potentially putting pressure on the Bank of England to cut interest rates.
If a rate cut occurs, the GBP/USD price could retreat from its highs, especially with the US central bank’s reluctance to ease policy. Federal Reserve Chairman Powell’s upcoming speeches could offer insights into their timeline, while US CPI data may influence the likelihood of a September rate cut.
Strong US CPI data could lead to further rate cuts, benefiting the dollar, while weak inflation figures may have a downside bias. Market watchers are also monitoring European and US political developments, with the pound showing support on hopes of UK stability.
In the forex market, the GBP/USD exchange rate has climbed to 1.2840, nearing a 4-month high, while the GBP/EUR rate is just below 1.1850. The French general election results surprised with the left-wing NUPES leading, prompting market concerns about fiscal policies and debt sustainability.
Technical forecasts for the GBP/USD pair suggest a new range forming around 1.2800, with potential support at 1.2650. Moving averages indicate a downside trend, but bullish momentum is present. Stochastic and RSI suggest bearish pressure, with room for further movement.
Overall, political stability in the UK is viewed positively, with no significant shifts expected in fiscal policies. The GBP/USD pair remains volatile, influenced by political and economic factors.