• Despite the recent strength of the US dollar following stronger-than-expected US jobs data, which has dampened any expectations of imminent US rate cuts, the GBP/USD currency pair has shown remarkable resilience.
• It settled around the 1.2720 level at the time of writing.
• Its highest gain last week touched the 1.2817 resistance level, the highest in nearly three months.

(Click on image to enlarge)

According to the results of the economic calendar, economists are divided on how many rate cuts Fed officials will signal for 2024 in their policy meeting this week, following recent high inflation numbers. Overall, policymakers are likely to backtrack on their long-held expectations of three US rate cuts this year, but it's a close call on whether they will stick to two rate cuts or not. Moreover, a majority of 41% of economists expect the "dot plot" to show two cuts, while 41% expect the projections to show just one cut or no cuts at all, according to a Bloomberg survey.

The FOMC, which has kept the benchmark interest rate at its highest level in two decades since July last year, was encouraged by the sharp decline in inflation in the second half of 2023 to decide on a gradual rate cut this year. However, these plans were put on hold after failing to make progress in early 2024. In this regard, Ryan Sweet, senior US economist at Oxford Economics, said in response to the survey: "The Fed is waiting for a series of data that will boost its confidence that inflation is on a sustainable path towards its 2% target." Added, "the balance of risks to our inflation outlook remains tilted to the upside."

Overall, officials are confident they will keep the U.S. benchmark rate steady in a range of 5.25% to 5.5% for a seventh straight meeting next week. Concurrently, chairman Jerome Powell and his colleagues will update their economic forecasts and interest rates at the June 11-12 meeting for the first time since March. Thus, the lower cuts point to a later start to cuts. Ultimately, this could have implications for the November presidential election, although Fed officials are uniformly saying their decisions are based solely on economic considerations.
 

Technical forecasts for the GBP/USD pair today:

We expect the GBP/USD rate to remain under downward pressure in an attempt to avoid further losses until markets and investors react to the release of US inflation figures and the US Federal Reserve’s policy decisions, along with a package of important UK economic releases. Based on the performance on the daily chart above, the 1.2775 resistance will remain a catalyst for bulls to push higher. The 1.3000 psychological resistance will be the most important to confirm the strength of the uptrend. Conversely, and over the same time frame, the 1.2600 support level will remain the strongest threat to the future of the current bullish rebound.

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