The GBP/USD outlook is complex, with both bullish and bearish arguments in play.
Short-Term Weakness:
- Recent BoE dovish signals and a potential delay in Fed rate cuts weigh on the GBP/USD.
- Technical indicators suggest a bearish trend, with potential support level breaches (1.2600, 1.2575).
- US PCE inflation data on Friday could strengthen the USD if it exceeds expectations.
Potential Bullish Reversal:
- Analysts at Equals Money see a possibility of a long-term directional change.
- Bullish patterns emerging on both GBP and USD indexes might indicate a trend reversal.
Key Events to Watch:
- Catherine Mann’s speech from the BoE on Monday for insights on the pace of rate cuts.
- US PCE inflation data on Friday (potentially market-moving due to Easter holiday).
Overall:
Despite short-term weakness, the GBP/USD could be undergoing a long-term bullish reversal. This hinges on the BoE’s future rate cut decisions and the Fed’s monetary policy stance. The US PCE inflation data on Friday will be crucial in this regard.