GBP/USD Slips on Mixed Employment Data, Eyes on BoE | Errante
Market Overview
The GBP/USD pair experiences volatility driven by the Fed’s decision and the coming up of BoE monetary policy. The price couldn’t hold the 1.3000 mark and slipped ahead of the key event.
Fundamental Analysis
Following the Fed’s decision, GBP/USD initially rose from 1.2960 to 1.3014. The US Dollar Index (DXY) remained at around 103.50. Powell’s cautious tone on inflation and economic uncertainty has increased speculation about future Fed rate cuts. The BoE’s upcoming announcement and Governor Bailey’s remarks could further impact GBP/USD volatility.
In the March meeting, the FOMC maintained its policy rates at 4.25-4.50%, citing economic uncertainty due to Trump’s trade policies. Fed Chair Powell shared his concerns about inflation due to tariffs and potential delays in the progress. He acknowledged the growth risks and revised the inflation forecast from 2.5% to 2.8% for 2025, lowering the GDP forecast to 1.7% from 2.1%. Markets reacted negatively, pricing in two rate cuts in 2025.
On the other hand, the Bank of England is expected to maintain its policy rate at 4.5% after a 25 bps cut in the last meeting. The UK inflation remains more stubborn than anticipated, with yearly headline inflation rising to 3% and core inflation at 3.7%. Meanwhile, the UK GDP showed a contraction of 0.1% in January, along with weak industrial output. The recent UK employment data remained a mixed bag with a significant rise in claimant count. The jobless claims soared to 44.2k while the forecast was 7.9k. Conversely, employment change came at 144k, up from 107k in December. The wage growth also showed a slight upside to 5.9% in three months, matching the forecast.
The BoE’s Monetary Policy Committee (MPC) is expected to vote 7-2 to hold rates. Doves within the MPC, like Catherine Mann and Swati Dhingra, may push for deeper cuts. If Bailey echoes concerns about economic slowdown, the pound could face downward pressure against the dollar.
Technical Analysis
The GBP/USD pair is currently testing the bullish order block that was established on March 14, highlighting a potential key decision point for traders. At present, the market is trading below both the 50 and 200 EMAs, which aligns with a bearish technical outlook. With the Bank of England’s monetary policy announcement imminent, volatility could lead to a decisive break in either direction. A failure to hold this bullish order block could ignite substantial selling pressure, potentially accelerating downward momentum. Conversely, if the pair finds support and bounces upward, it could target the liquidity zone near the bearish order block formed earlier today around 1.3014. This level, aligning as an immediate resistance, will indicate the directional strength of the pound following the policy release and short-term market sentiment
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