• The GBP/USD forecast shows caution ahead of this week’s BoE policy meeting.
• The US economy added a bigger-than-expected 177,000 new jobs in April.
• Tensions between China and the US eased last week.

The GBP/USD forecast shows caution ahead of this week’s Bank of England policy meeting. However, the pound remains steady near lows hit on Friday after an upbeat US employment report. At the same time, the dollar steadied last week amid easing trade tensions between China and the US.

Market participants are looking forward to Thursday’s Bank of England policy meeting, where policymakers might vote to cut interest rates by 25-bps. Some economists believe the BoE should consider a faster pace for rate cuts. Trump’s tariffs have clouded the outlook for the global economy. Therefore, UK economic growth will also suffer, pressuring the central bank to lower rates. 

Meanwhile, the pound dropped on Friday after the US released upbeat employment figures. The economy added 177,000 new jobs in April compared to forecasts of a 138,000 increase. Meanwhile, the unemployment rate held steady at 4.2%. Trump escalated his tariffs in April. Therefore, some experts were expecting to see dismal economic figures. However, the labor market remains resilient, justifying the Fed’s cautious stance. 

At the same time, tensions between China and the US eased last week, allowing the greenback to recover its lost shine. Still, market participants are waiting for a deal to end the ongoing trade war.

GBP/USD key events today

• US ISM Services PMI

GBP/USD technical forecast: Bears gear up to test 1.3225 support

(Click on image to enlarge)

GBP/USD 4-hour chart

On the technical side, the GBP/USD price trades below the 30-SMA and the RSI is under 50, suggesting a bearish bias. Bears recently strengthened enough to puncture the 30-SMA after the previous uptrend paused at the 1.3401 resistance level. 

Here, bulls failed to sustain a move higher, allowing the price to dip below the SMA. However, when it neared the 1.3225 support, bulls returned to make a second attempt at the resistance level. The price punctured above the resistance but was swiftly rejected. 

At the same time, although it made a higher high, the RSI made a lower one, indicating a bearish divergence. Soon after, bears returned. A break below the 1.3225 support would confirm a new downtrend. Moreover, it would clear the path for GBP/USD to retest the 1.3000 key psychological level.

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