GBP/USD Weekly Forecast: Bears Boost Below 1.38, Eyeing FOMC, BoE

Photo by Colin Watts on Unsplash 

  • The GBP/USD weekly forecast is bearish as the US dollar soared across the board.
  • The UK CPI increased 3.2% over last year, compared to the Bank of England’s target range of 1-3%.
  • Two BoE members voted in August to reduce bond purchases, and the number could increase.
  • Chairman Powell is expected to be cautious given the recent weakening data and its dovish tendencies.

The GBP/USD weekly forecast is bearish as the US dollar soared across the board. As a result, the pair saw a net negative change of 95 pips during the week. Last week’s data was a cause for concern among investors. In the upcoming week’s events, central banks are likely to take center stage since the timing of the Fed cut and the possibility of a Bank of England rate hike is crucial for the GBP/USD pair.

US inflation is falling, as demonstrated by the August Core Consumer Price Index (Core CPI), which fell 4% year-over-year, while import prices dropped 0.3% instantly. The drop in inflation confirms the view of Federal Reserve Chairman Jerome Powell that the rise in prices is temporary and may delay the bank’s decision to cut interest rates.

A “consumer strike,” however, may cause inflation to fall as a result of previously increased spending. As long as that demand disappears, the US and global economy could be put under pressure. The US dollar has thrived because of that mindset.

The UK CPI increased 3.2% over last year, compared to the Bank of England’s target range of 1-3%. Sterling was giddy with excitement. There is, however, a downside to price hikes in the UK – potential blackouts during winter.

Even though September has been a mild month, natural gas prices rose in Europe and the UK. Consumers can end up with empty pockets even without experiencing a catastrophic failure. The recovery is at risk.

The government of British Prime Minister Boris Johnson changed, but Sunak stayed as Treasury Secretary. Before the cold season, the Prime Minister has also increased vaccination rates due to high cases in the UK. However, hospitals are not facing significant pressure. The number of serious cases is lower in the UK than in the US because vaccination rates are higher.

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