The GBP/USD forecast paints a bearish picture as investors gain confidence that the Bank of England will implement two rate cuts this year. At the same time, the dollar regained momentum as the effects of the downbeat jobs report wore off.

The Bank of England will meet on Thursday, and economists expect policymakers to maintain interest rates. However, the focus will be on clues for future policy moves. BoE policymakers have grown comfortable with the view that inflation in the UK is falling towards the central bank’s target.

As a result, investors are fully pricing in two 25-basis-point rate cuts this year. Moreover, analysts expect the first cut as early as June. This would put the pound in a weaker position against the dollar since the Fed might implement its first rate cut in September. 

Although the recent US employment report raised expectations for Fed rate cuts, the US economy remains far more robust than other major economies. The employment figures gave the Fed a moment’s relief. However, after the news settled in, it became clear that policymakers would need more than one downbeat report to settle on the timing for the first rate cut. Consequently, the dollar regained strength, rallying against most major currencies on Wednesday.

GBP/USD key events today

No high-impact reports are coming from the UK or the US today. As a result, investors will keep speculating ahead of the BoE meeting.

GBP/USD technical forecast: Decline pauses at key Fib retracement level

(Click on image to enlarge)

GBP/USD 4-hour chart

On the technical side, the GBP/USD price is on a sharp decline that has paused at the 0.5 Fib retracement level. The bias shifted from bullish to bearish when the price broke below its support trendline and the 30-SMA. At the same time, the RSI dipped below 50 into bearish territory. 

If bearish momentum remains strong, the price will soon break below the Fib level and aim for the 1.2301 support. On the other hand, if the Fib level holds firm, the price will bounce higher to retest the recently broken SMA before resuming the decline.

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