The British pound rose during the North American session on Wednesday as the US dollar (USD) weakened on expectations that the Federal Reserve Bank (Fed) will cut interest rates later in the day. At the time of writing, the GBP/USD pair is trading at 1.3336 after bouncing from daily lows of 1.3296.
GBP/USD rises amid US dollar weakness and expectations of interest rate cuts from the central bank
Financial markets appear to be at a pause, as traders hold their notes waiting for the Fed. However, the US Dollar Index (DXY), which tracks the performance of the dollar’s value against a basket of six other currencies, was down 0.21% at 99.03, providing a backdrop for the cable.
Data in the US showed mixed signals, with inflation stalling towards the 3% threshold as measured by the core PCE price index, while the latest unemployment claims readings indicated the labor market is in a hiring-and-firing environment.
On Tuesday, the 4-week average change in ADP employment showed that companies hired an average of 4,750 people in the four weeks ending November 22, an improvement compared to the previous reading. Job vacancies also rose, as stated in the October JOLTS report.
As for the British economy, markets were relieved after the Autumn Budget. A flash reading of the Purchasing Managers’ Index (PMI) last week showed the economy in better shape than expected, however the Bank of England is expected to cut interest rates at next week’s meeting.
Capital Edge shows that the odds of the Bank of England cutting its interest rate by 25 basis points are around 92% at the December 18 meeting, with traders also pricing in a further rate cut for 2026.
What to expect at the Fed meeting?
Traders have been pricing in a “tight cut” by the Fed. The economic outlook for next year will be interesting, in terms of the unemployment rate, core personal consumption expenditures numbers, and the path of the federal funds rate. After initial backlash, Chairman Jerome Powell’s press conference will set the stage for the first quarter of 2026, when he will not be chosen to remain Fed Chairman for another term.
GBP/USD Price Forecast: Technical Outlook
GBP/USD remains neutral to bullish, with trades testing the 200-day SMA at 1.3333. A break of the latter exposes the 100-day simple moving average at 1.3358, followed by 1.3400. On the flip side, the first support is located at 1.3300, followed by the 50-day SMA at 1.3255 and the 20-day SMA at 1.3210.
The price of the pound sterling this week
The table below shows the percentage change in the British Pound (GBP) against the major currencies listed this week. The British pound was the strongest against the Japanese yen.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.06% | 0.05% | 0.74% | 0.24% | 0.05% | -0.13% | -0.13% | |
| euro | -0.06% | 0.04% | 0.75% | 0.23% | 0.05% | -0.14% | -0.15% | |
| GBP | -0.05% | -0.04% | 0.73% | 0.19% | 0.02% | -0.18% | -0.18% | |
| JPY | -0.74% | -0.75% | -0.73% | -0.51% | -0.68% | -0.86% | -0.86% | |
| Canadian | -0.24% | -0.23% | -0.19% | 0.51% | -0.17% | -0.38% | -0.37% | |
| Australian dollar | -0.05% | -0.05% | -0.02% | 0.68% | 0.17% | -0.20% | -0.20% | |
| New Zealand dollar | 0.13% | 0.14% | 0.18% | 0.86% | 0.38% | 0.20% | -0.00% | |
| Swiss franc | 0.13% | 0.15% | 0.18% | 0.86% | 0.37% | 0.20% | 0.00% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
