• The GBP/USD weekly forecast shows a drop in BoE rate cut expectations.

• Nearly half of the BoE officials were ready to keep interest rates unchanged.

• US unemployment claims data further supported rate cut bets.

The GBP/USD weekly forecast shows a drop in BoE rate cut expectations after a divided vote at the last meeting.

Ups and downs of GBP/USD 

The GBP/USD pair ended the week bullish as the pound rallied after an unexpected Bank of England policy meeting. At the same time, the dollar eased amid an increase in Fed rate cut expectations, allowing sterling to climb.

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The BoE cut interest rates as expected last week. However, policymakers had to vote twice before deciding. Nearly half the officials were ready to keep interest rates unchanged due to the high inflation in the UK. As a result, future rate cut expectations fell and the pound rallied. 

Meanwhile, in the US, data on business activity and unemployment claims further supported rate cut bets, weighing on the dollar.

Next week’s key events for GBP/USD 

Next week, the UK will release employment figures, manufacturing production, and GDP data. Meanwhile, the US will release inflation and retail sales figures. The UK economy has fared poorly according to recent economic data, especially in the labor market. Another set of downbeat employment figures could increase expectations for more BoE rate cuts, hurting the pound. 

Meanwhile, in the US, rate cut bets have risen sharply due to a slowdown in the labor market. However, bets might drop with another upbeat employment report.

GBP/USD weekly technical forecast: SMA break signals likely reversal

On the technical side, the GBP/USD price has broken above the 22-SMA, indicating a bullish shift in sentiment. At the same time, the RSI has broken above 50, suggesting stronger bullish momentum. Initially, the price had started showing signs of a downtrend. It broke below the SMA, retested it, and made a lower low. 

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However, at the 1.3151 support, bulls emerged with renewed strength and pushed the price above the SMA. However, bulls must now break above the 1.3451 key level. Such a move would clear the path for the price to retest the 1.3803 resistance level. Meanwhile, a break above this level would resume the previous uptrend. 

However, there is also a chance that the price might fail to break above the 1.3451 resistance. In such a case, the price would drop to retest the 1.3151 support level. A break below would resume the downtrend.

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