• UK GDP indicates modest growth, while dovish Fed expectations weakened the dollar.
• Geopolitical risks like US-China trade frictions and French political uncertainty keep sentiment cautious. 
• Traders look forward to FOMC Waller’s speech and the Philly Fed manufacturing index for further impetus.

The GBP/USD forecast indicates the price stays above the 1.3400 level, backed by mixed but better UK macroeconomic data. The Office for National Statistics released figures, indicating the UK GDP grew 0.1% in August, which met expectations. Moreover, the manufacturing production also exceeded expectations, suggesting an improvement in industrial output. 

Meanwhile, the labor market conditions seem subdued amid rising unemployment rates and jobless claims at 4.8% and 25.8k, respectively. The data further suggested that while average earnings grew to 5.0%, there was a decline in pay growth at 4.7%, the softest pace since 2022. The data favors continuing expectations of rate cuts by the BoE to support growth, capping significant upside for the British Pound. 

The dollar remains steady from the US but cannot extend its uptrend due to expectations of Fed rate cuts this year. Additionally, the persistent US government shutdown, passing its third week, has aggravated concerns about fiscal and economic decline. The CME FedWatch Tool shows an almost certain 25 basis point cut this month and another one in December. This decision has further limited the dollar’s appeal. 

Furthermore, the China-US trade frictions and political upheaval in Japan and France are key global risk factors, cautioning the markets. 
 

GBP/USD Daily Key Events

The significant events happening in the day include

• FOMC’s Waller speaks
• Philly Fed Manufacturing Index

On Thursday, traders look ahead to FOMC member Waller’s speech and the Philly Fed Manufacturing Index for insights into growth expectations and the Fed’s potential policy path. 
 

GBP/USD Technical Forecast: Bullish Momentum above 1.3400
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

The GBP/USD 4-hour chart indicates the pair hovers around 1.3420, staying above key near-term MAs after a sharp recovery from the downside. The 50-period MA is above the 20-period MA, signaling a short-term bullish momentum. The 200-period MA near the 1.3480 level acts as a key resistance level. A decisive break above this zone could extend the gains towards the 1.3550-1.3600 level, signaling an upside reversal. 

The RSI is at 62, indicating a bullish bias. However, the pair is near the overbought region, suggesting a potential pause in momentum before further upside. Immediate support sits at 1.3375 and 1.3345. A break below these levels could reach the 1.3270 level. Overall, the pair maintains a cautious bullish stance as long as prices hold firm above 1.3370. 

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