GBPUSD, Gold Analysis: Market Uncertainty Pressures the Pound and Boosts Metals

Key Events for the Week Ahead

• UK Claimant Count Change (Tuesday)
• UK CPI (Wednesday)
• US Retail Sales (Thursday)
• BOE Monetary Policy Report Hearings (Thursday)
• UK Retail Sales (Friday)

The latest US CPI results have strengthened expectations for a 25bps Fed rate cut following the positive non-farm payroll data. The drastic easing expectation by the markets has faded given the stability of the US Dollar Index right below the 103-mark. With economic uncertainty reentering the play alongside that of US elections and Geopolitical tensions, both the US Dollar Index and Gold remain on bullish grounds.

As for the British Pound, after retesting the 1.3450 barrier (the 2009 low), the pressure between the BOE and the DXY has pushed the GBPUSD back towards the 1.30 zone, which aligns with the upper boundary of the 15-year consolidation range. With the BOE signaling a more aggressive easing cycle and the Fed likely taking a less aggressive stance, the GBPUSD is under notable pressure.

Next week could bring further volatility with key UK economic data, including claimant count change, which saw a sharp improvement in August (from 102.3k to 23.7k), the UK CPI, which has stabilized around the central bank's target between 2-2.2%, and BOE Monetary Policy Report Hearings.

Technical Analysis

GBPUSD Analysis: Monthly Time Frame – Log Scale

Source Trading view

The GBPUSD has rebounded from the 0.236 Fibonacci retracement level (1.3434) of the downtrend between 2007 and 2022. The pair is currently retesting the upper boundary of the 15-year consolidation range at the 1.30 support level.

Given the strength of this support, a potential rebound could push the pair back towards the 1.3430 high. A close above this level could open the door for a move towards the 1.37 zone. On the downside, falling back inside the consolidation below 1.30 could lead to support at 1.2870 and 1.2730.

Gold Analysis: 3Day Time Frame – Log Scale

Source: Tradingview

Gold recently corrected from its 2685 record high, finding support at the trendline connecting the consecutive highs of July and August 2024 at the 2603 low. With rising uncertainties around monetary policies, US elections, and geopolitical tensions, alongside strong technical support from the primary uptrend channel, gold’s overall outlook remains positive.

A close above the 2685 high would align gold with further targets at 2760, 2800, 2890, and 3000. On the downside, a break below 2580 could increase selling pressure, leading to further declines toward 2520 and 2480, signaling a potential shift in sentiment.

 

--- Written by Razan Hilal, CMT on X: @Rh_waves