On Tuesday, the GBPUSD currency pair quotes reached a one-month-high amid growing expectations of monetary policy easing in the United States. Investors are awaiting speeches from Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey on Friday at the central bankers’ gathering in Jackson Hole. These events could provide important clues on the outlook for monetary policies in the US and UK.
Expectations of a dovish tilt in the minutes of the Fed’s July meeting, published on Wednesday, and Powell’s upcoming speech pushed the dollar to a seven-month low against major currencies.
According to CME FedWatch, market participants consider a 24.5% probability of the US central bank cutting interest rates by 50 basis points in September. A week ago, the probability was 50%. The probability of a 25-basis-point rate cut now stands at 75.5%.
The British pound has gained 2.3% since hitting a one-month low of $1.2663. This was due to a recovery in market sentiment and data pointing to the positive dynamics of the UK economy and easing inflation.
This month, the Bank of England has already cut rates from a 16-year high to the level of 5%. According to the recent Reuters poll, there is also a 39% chance of another move toward monetary policy easing.
August PMI readings on Thursday may offer fresh clues on the state of UK business activity.
Technical data on GBPUSD suggests the formation of a broad ascending channel on the daily chart (D1). In terms of wave analysis, the quotes are in the process of forming the third impulsive wave on the H4 chart. The Moving Average of Oscillator indicator (with parameters 12, 26, 9) remains bullish, indicating potential growth.
Short-term prospects for the GBPUSD currency pair quotes suggest buying, with the target at the level of 1.3250. Part of the profit should be taken near the level of 1.3045. A Stop loss could be placed at the level of 1.2790.
Since the bullish trend is short-term, the trading volume should not exceed 2% of your total balance to reduce risks.
