Key U.S. data, including the ADP Employment Report and Q3 GDP, may impact the dollar’s strength and GBP/USD.
Key Points
- GBP/USD hovers near 1.3000 as investors await the U.K. budget and key U.S. data.
- The dollar softens on mixed U.S. indicators, balancing consumer strength with labor market easing.
- Sterling could face pressure if the U.K. budget signals increased gilt issuance.
GBP/USD Daily Price Analysis – 30/10/2024
GBP/USD is experiencing subtle fluctuations as investors await the U.K.’s budget announcement and key U.S. data later in the week. Currently, the pair trades around 1.30003, reflecting a slight dip from its previous close as the dollar weakens from a recent three-month peak. Recent U.S. economic indicators hint at a mixed economic outlook, with a resilient labor market but signs of consumer confidence softening. This ambiguity has dampened the dollar’s rally, allowing GBP/USD to consolidate near 1.30.
On the U.K. side, investor caution prevails ahead of the debut budget from the new Labour government. Market participants are watching closely, especially with anticipated news on government bond issuance or gilts, which could impact sterling and bond yields if the supply increases significantly.
U.S. Dollar Softens Amid Mixed Signals
The dollar’s slight retreat can be attributed to mixed signals from the U.S. economy. Recent job data revealed some easing in the labor market, countered by strong consumer sentiment, keeping the Federal Reserve’s rate outlook uncertain. The ADP private employment report and Q3 GDP data are due today, likely adding volatility to the dollar if the results are strong enough to revive expectations of a hawkish Fed stance. Meanwhile, the U.S. dollar index hovered around 104.16, slightly down from its recent peak of 104.63.
Adding to this outlook, U.S. Treasury yields have shown signs of moderation, with the 10-year Treasury yield at 4.232%, after previously reaching highs above 4.33%. Francesco Pesole, an ING currency strategist, commented that recent job data has cooled the dollar’s momentum, though a robust GDP reading could still limit downside risks for the dollar ahead of Friday’s employment report.
Sterling’s Trajectory Ahead of Key U.K. Budget
Sterling’s outlook today hinges on the budget announcement expected at 12:30 GMT. Investors are particularly sensitive to any announcements of increased government bond issuance. Analysts expect a modest increase in gilt supply, likely between GBP 10 billion and GBP 20 billion, for the 2024-2025 fiscal year. Should issuance surpass this forecast, downward pressure on sterling and gilts could follow. While the pound has rebounded from its September 2022 lows, reaching a notable trade-weighted level of 107.42 this month, this rally may lose steam if today’s budget results disappoint or trigger a shift in sentiment.
Unlike the market’s reaction to the 2022 mini-budget, today’s fiscal environment is relatively stable, and markets are less prone to shocks. With interest rates at or nearing their peaks, bond markets are better hedged and less likely to react dramatically to fiscal announcements, reducing the risk of unexpected volatility.
Key Economic Data and News to Be Released Today
Today’s primary focus is on the U.S. ADP Employment Report and third-quarter GDP growth figures, which will provide fresh insights into the health of the U.S. labor market. Markets expect that a strong employment report could further reduce expectations for Federal Reserve rate cuts, potentially lending strength to the U.S. dollar and placing downward pressure on GBP/USD.
Additionally, the U.K. Labour government’s debut budget announcement, expected at 12:30 GMT, will be closely monitored for details on gilt issuance for the upcoming fiscal year. Should the projected supply exceed market expectations, sterling could face additional headwinds.
GBP/USD Technical Analysis – 30/10/2024
GBP/USD is currently trading within a bullish channel, hinting that the price may continue to the upside in the short term. Also, price is trending fairly above the 200 EMA, further strengthening the bullish bias.
In the meantime, we may expect the price to pull back to the resistance line of the ascending channel while the RSI also pulls back to the oversold level just before the pair resumes its bullish movement for the day.
GBP/USD Fibonacci Key Price Levels 30/10/2024
Short-term traders planning to invest in GBP/USD today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 1.29749 | 1.30199 |
| 1.29610 | 1.30338 |
| 1.29385 | 1.30563 |
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