• The GBP/USD forecast indicates renewed strength in the pound as focus shifts from the Fed to the BoE.
• Powell said the Fed would continue easing, with forecasts showing two more cuts this year.
• The Bank of England will likely keep interest rates unchanged.

The GBP/USD forecast indicates renewed strength in the pound as focus shifts from the Fed meeting to the upcoming Bank of England meeting. Initially, the currency collapsed as the US dollar gained after the Fed decision. However, traders are now expecting a cautious tone from the Bank of England due to high UK inflation.

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The dollar initially collapsed after the Fed cut interest rates by 25-bps as expected. However, it recovered soon after since market participants had already priced in most of the move. Meanwhile, Powell said they would continue easing, with forecasts showing two more cuts this year. However, the outlook for next year remains uncertain, with traders having priced just one rate cut.

“The revised forecasts highlighted the degree of uncertainty that remains over the outlook,” said Elliot Clarke, head of international economics at Westpac.

“The timing and scale of the forecast rate cuts also point to lingering risks for inflation.”

Meanwhile, the Bank of England will likely keep interest rates unchanged. The central bank is grappling with high inflation that has caused caution among policymakers. Moreover, experts are only predicting one more rate cut this year.

GBP/USD key events today

• Bank of England policy meeting
• US unemployment claims

GBP/USD technical forecast: Bulls show readiness to bounce off the 30-SMA

On the technical side, the GBP/USD price has bounced off the 30-SMA after dropping to retest the line. If it respects this support, the bullish bias will remain intact. Meanwhile, the RSI trades above 50, suggesting solid bullish momentum.

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GBP/USD rallied to a new high in the previous session and briefly punctured the 1.3701 resistance level before pulling back sharply. The pullback allowed the price to retest the 30-SMA after such a steep climb. However, it also revealed some strength among bears, who made large red candles.

If the SMA holds firm, bulls will retest the 1.3701 resistance and likely break above to make a new high. Such a move will continue the bullish trend. On the other hand, if bulls fail to reach a new high or the SMA gives way at any point, the bias will change to bearish.

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