Dollar bulls cheer Trump’s choice for new US Treasury Secretary
Market observers are eagerly anticipating the release of the FOMC meeting minutes.
Recent data indicates a more pronounced economic slowdown than expected in the UK.
GBP/USD forecast and market analysis
The forecast for the GBP/USD pair suggests further strengthening of the dollar following Trump’s selection of Scott Bassent as the next US Treasury Secretary. On the other hand, due to discouraging economic data, the British pound remained fragile after hitting a six-month low last Friday.
Greenback gains strength amid optimistic market sentiment
The US dollar regained momentum on Monday as optimism grew surrounding Trump’s choice for US Treasury Secretary. Scott’s favorable comments regarding a robust dollar and proposed tariffs on imports have led traders to believe in a positive future for the dollar.
At the same time, investors are eagerly waiting for more insights into the future moves of the Federal Reserve. The upcoming release of the FOMC meeting minutes could provide more clarity on the decisions made during the December meeting, which occurred soon after Trump’s victory, altering the economic outlook for the US.
Pound weakens due to underwhelming economic indicators
The pound faced weakness after data revealed a more significant economic slowdown in the UK than anticipated. Notably, retail sales declined by 0.7%, surpassing the expected 0.3% decrease, signaling subdued consumer spending.
Additionally, PMI data exhibited an unexpected drop in business activity within the manufacturing and services sectors, further adding pressure on the Bank of England to consider interest rate cuts.
GBP/USD technical forecast
The technical analysis of the GBP/USD pair indicates a decline after testing the 30-period Simple Moving Average (SMA) resistance. The Relative Strength Index (RSI) falling significantly below the 50 level suggests a strong bearish trend, with a potential retest of the 1.2500 support level.
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Source : www.forexcrunch.com