GBP/USD continued its upward trend on Wednesday, marking a fifth consecutive day of gains with an increase of 0.55%, surpassing the 1.3200 mark. As the price approaches important long-term moving averages, the momentum seems to rest with the bulls as we move into the latter part of the trading week.
The U.S. markets will be mostly inactive for the remainder of the week, as traders take a break for the Thanksgiving holiday. Meanwhile, the situation in the UK regarding economic data remains quite stable, although there are ongoing tensions related to the government budget. Parliament is currently trying to find solutions to fund its operations without allowing the deficit to spiral out of control.
Traders in interest rates see better than an 80% probability of a third successive quarterly rate cut during the upcoming Federal Open Market Committee (FOMC) meeting on December 10, according to data from CME’s FedWatch tool. In the past week, several key FOMC voting members have adopted a surprisingly dovish stance, shifting the Fed’s overall perspective on potential rate cuts from a cautious outlook at its last meeting.
GBP/USD Price Prediction
On the daily chart, GBP/USD is hovering around the 1.3250 level. The 200-day exponential moving average (EMA) is currently trending down at 1.3265, which is limiting upward movement and fostering a bearish sentiment. Prices are trading below this level, indicating the rally may still be delicate. The slow stochastic oscillator (14,5,5) has climbed to 71.9, suggesting an overbought condition following the recent rally.
Given that the stochastic oscillator is nearing its upper limits, there appears to be some fatigue in the momentum, which might indicate a upcoming pause or a minor pullback. If the daily closing price exceeds the 200-day EMA, bullish sentiment could strengthen, potentially leading to further gains. Conversely, if it remains below, rejection might persist. A bearish rollover in the stochastic could heighten downside risks, while sustaining levels above 70 could maintain short-term upward momentum.
