The USD/GBP price moved sideways this week as investors waited for the upcoming US consumer confidence data. It also consolidated as the market refocused on the new political stability brought by the new Rishi Sunak’s administration. The USD to GBP exchange rate was trading at 0.8840 on Tuesday, which was lower than last week’s high of 0.9652.
US consumer confidence data
The USD/GBP price has been in a strong bullish trend in the past few months. It has risen by more than 26% from its lowest level in 2020 due to the strong US dollar and the dysfunction in the UK. The US dollar index has risen by over 20% this year alone.
On Monday, Rishi Sunak received the mandate to become the next UK prime minister following the Truss resignation. Analysts believe that his appointment will bring a sense of stability in the UK. In his previous campaigns, he advocated for smaller tax increases in a bid to bring fiscal discipline in the country. Truss took the opposite view and implemented debt-fueled tax cuts.
The next key catalyst for the USD/GBP price will be the upcoming US consumer confidence data scheduled for Tuesday. Economists expect the data to show that consumer confidence dropped from about 108 in September to 106 in October. A slowdown in confidence could play a part in a Fed pivot, where it slows interest rate hikes. Analysts expect that the Fed will hike by 75 basis points in November and then hint at a pivot.
USD/GBP forecast
The daily chart shows that the USD to GBP exchange rate has been in a strong bullish trend in the past few months. In this period, it has managed to move above the ascending trendline shown in black. It has also remained above the 50-day exponential moving average while the Relative Strength Index (RSI) has moved to the neutral level.
Therefore, despite some bearish patterns emerging, the USD/GBP price will remain in a bullish trend. If this happens, the next key level to watch will be at 0.9100. A drop below the 50-day EMA will invalidate the bullish view.
