The pair has jumped above the 25-period and 50-period moving averages, signaling that bulls are in control. Bullish view
Bearish view
The GBP/USD pair continued its recovery as the risk-on sentiment accelerated following some positive news from Federal Reserve officials. The pair jumped to a high of 1.2715, the highest point since August 31st. It has risen sharply after falling to 1.2040 in October. Fed rate cut hopes riseThe GBP/USD pair rallied after the US published strong economic data. Home houses continued rising in September even as mortgage rates accelerated. The house price index (HPI) rose by 0.6% on a MoM basis and by 6.1% on a YoY basis. This increase was higher than what analysts were expecting.Another report by the Conference Board revealed that consumer confidence rebounded this month. It jumped from 99.1 in October to 102 in November. That jump was also better than the median estimates. This is an important report because of the crucial role that consumer spending has on the economy.These numbers, together with the strong Thanksgiving weekend shopping, mean that the economy is getting more resilient. It also means that the Federal Reserve has successfully engineered a soft landing.Two Federal Reserve officials hinted that the bank will start cutting interest rates in 2024. In a statement, Christopher Waller, one of the most hawkish officials, said that rates could start to fall if the disinflation trend continues.Other Fed officials have pointed that the hiking cycle has ended. These statements are supported by the falling consumer inflation. The most recent data showed that the headline inflation dropped to 3.2% in October and there are signs that it continued falling in November.Therefore, the GBP/USD pair has rallied as investors price in the possibility that the Fed will cut rates by 0.25% by June. They also expect that it will deliver more cuts in the second half of the year. The key data to watch on Wednesday will be the latest US GDP numbers and the Fed’s beige book. GBP/USD technical analysisThe GBP/USD pair has continued its relentless rally as the US dollar index (DXY) crashed. It peaked at over 1.2700 on Wednesday, its highest point since September 1st. The pair has jumped above the 25-period and 50-period moving averages, signaling that bulls are in control.Additionally, the Relative Strength Index (RSI) moved to the overbought level of 72 while the MACD remains above the neutral point. Therefore, based on trend-following strategies, the pair will likely continue rising as buyers target the resistance at 1.2800.(Click on image to enlarge)
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