GBP/USD Analysis Today 10/10: Downward Channel (Chart)

(MENAFN- Daily Forex)

• As expected, the GBP/USD pair has been heavily impacted by the minutes from the federal Open market Committee (FOMC) meeting.
• The US dollar strengthened, causing further losses for the pair, which has now dropped to the support level of 1.3055.
• This brings the pair dangerously close to breaking a strong psychological support barrier.

According to the content of the minutes of the last meeting of the US Federal Reserve. Federal Reserve officials were uncertain about the extent of US interest rate cuts at their meeting in September, but they chose a half-point cut to balance inflation confidence with Labor market concerns, according to the meeting minutes. In the end, Governor Bowman only opposed a 50-basis point cut, preferring 25 basis points instead – marking the first dissent from a Fed chair on interest rates since 2005. The Fed noted that a 50-basis point cut should not be interpreted as evidence of a less favourable economic outlook or as a signal that the pace of policy easing will be faster than participants' assessments of the appropriate path.

In addition, almost all members expressed confidence that US inflation is moving sustainably towards 2%. The Fed lowered the target range for the federal funds rate by 50 basis points to 4.75%-5% in September 2024, the first cut in borrowing costs since March 2020, and expects 100 basis points of easing by the end of the year. The US consumer price index report, scheduled for release on Thursday, could also affect the direction of the US dollar, as stronger inflation figures could lead to further gains for the dollar against the pound.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Technical forecasts for the GBP/USD pair today:

The GBP/USD pair has formed higher lows connected by a solid upward trend line since May of this year. Technically, the price seems ready for another test of the upward support zone that coincides with the 61.8% Fibonacci retracement level. Currently, the pair is approaching the 50% Fibonacci retracement level at the key psychological level of 1.3100. Moreover, it could retreat to the 61.8% level closer to the secondary psychological handle of 1.2950 and dynamic support for the 100-day simple moving average.

Regarding moving averages, the 100-day simple moving average is above the 200-day simple moving average, confirming that the strongest resistance path is upward or that support is likely to hold rather than break. The gap between the indicators is widening to reflect strong upward pressure. At the same time, the stochastic indicator is heading downward but is already declining into the oversold zone, reflecting exhaustion among sellers, so a shift upwards would signal a return of upward momentum. The oscillator has ample room to rise before reversing to overbought levels or exhaustion among buyers, so a rebound could push the GBP/USD pair back to its highest level near 1.3500. However, the Relative Strength Index has more room to decline before reaching oversold levels, so the correction may continue until that happens. Ultimately, a break below support could indicate that a reversal from the long-term uptrend is underway.

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