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GBP/USD Bears Gain Control as Fed Hints December Rate Cut Is Uncertain
Traders' Opinions
Summary:
GBP/USD extended its three-day slide, dropping below 1.3200 amid a hawkish U.S. Federal Reserve rate cut, while market attention turns to the Bank of England’s upcoming policy decision and UK fiscal plans.
Sell
PENDINGGBPUSD
EXP
1.31700
Entry Price
1.27000
TP
1.33000
SL
1.31377 +0.00025 +0.02%
--
Point
PENDING
1.27000
TP
CLOSING
1.31700
Entry Price
1.33000
SL
GBP/USD extended its losses for a third consecutive session on Thursday, tumbling over 0.25% as traders pushed the currency pair below the key 1.3200 handle. At the time of writing, the British pound trades near 1.3160, after briefly touching a daily high of 1.3218. The move comes in the wake of a “hawkish” U.S. Federal Reserve rate cut, with Chairman Jerome Powell signaling that a further reduction in December is “far from a foregone conclusion,” dampening hopes for additional monetary easing.
The latest Federal Reserve decision saw rates cut to a range of 3.75%-4%, though the vote was not unanimous. Fed Governor Stephen Miran pushed for a more aggressive 50-basis-point cut, while Kansas City Fed President Jeffrey Schmid voted to keep rates unchanged. In addition, the Fed announced the conclusion of Quantitative Easing on December 1, underscoring a cautious approach amid limited U.S. economic data caused by the ongoing government shutdown, now entering its 30th day. Powell emphasized that risks remain tilted to the upside for inflation and downside for employment, adding that constructive discussions took place regarding the December meeting.
The pound remains under pressure ahead of next week’s Bank of England (BoE) policy decision and the UK government’s fiscal announcements. Reports from the Financial Times suggest Chancellor Reeves is considering an early removal of the windfall tax on the UK oil and gas sector, while The Telegraph notes a possible 2% increase in income tax is on the table. These potential fiscal changes have added to the cautious sentiment surrounding sterling.
The U.S. economic calendar remains light, with market participants eyeing speeches from Dallas Fed President Lorie Logan later today, followed by comments from Atlanta Fed’s Raphael Bostic and Cleveland Fed’s Beth Hammack at a research conference on Friday. These remarks are expected to provide further guidance on the Fed’s stance amid the ongoing uncertainty.
Technical Analysis
From a technical perspective, GBP/USD is displaying a bearish bias. The pair’s recent failure to hold above the 200-day simple moving average (SMA) at 1.3242 has paved the way for the decline below 1.3200. Intraday, the pair has found temporary support around 1.3190.This support has helped the pound stabilize marginally and recover from oversold conditions indicated by relative strength metrics.
Despite these brief gains, the overarching trend remains firmly negative. A sustained daily close below the 200-day SMA would confirm a shift in market sentiment, exposing further downside targets at the psychologically significant 1.3000 level and the April 8 low of 1.2700.
TRADE RECOMMENDATION
SELL GBPUSD
ENTRY PRICE: 1.3170
STOP LOSS: 1.3300
TAKE PROFIT: 1.2700
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