empty
05.05.2025 06:44 AM
GBP/USD Overview – May 5: Bank of England and Fed Meetings

This image is no longer relevant

The GBP/USD currency pair failed to show any decisive movement on Friday—it neither rose nor fell significantly. Many analysts interpreted the U.S. labor market and unemployment data as positive simply because the numbers weren't worse than expected. However, from our perspective, that's a weak consolation for the dollar. Yes, Nonfarm Payrolls slightly exceeded forecasts, but most of the previous U.S. data releases were disastrous, and the March NFP figure was revised downward. True, the unemployment rate didn't rise—but since when has the absence of deterioration been considered a strong positive factor? The problem is that the market is ignoring genuinely positive factors for the dollar. They are overshadowed by the negative sentiment created by Donald Trump, who continues to push for a revision of trade relations with half the world. Trump believes this new trade policy will strengthen the U.S. economy over time. Experts—including us—strongly doubt that. And the market appears to agree.

Therefore, the U.S. dollar can only count on a technical correction at this stage. We do not believe that last week's appreciation of the dollar was triggered by positive fundamentals or macro data—simply because there were none. In the absence of any new escalation in the global trade war, the market has likely started to take profits on short dollar positions. What we are seeing is a correction.

Only the Federal Reserve and Bank of England meetings matter in the upcoming week. Even these events—typically triggering 100–200 pip moves—may now be easily overlooked. The Fed is highly likely to leave the key rate unchanged. Jerome Powell and his colleagues are not hurrying to draw conclusions and are prepared to adjust monetary policy based on concrete macroeconomic changes—not speculative fears. Powell is watching for rising inflation, slowing growth, and increasing unemployment, but the real question is how bad the situation will get. If the U.S. economy slows down modestly, that's one thing. If it enters a prolonged recession, that's another.

The BoE, however, is likely to cut its key interest rate by 0.25%. It hasn't rushed into monetary easing so far, but with inflation slowing in the UK, there's little reason to keep the rate unchanged. Accordingly, the BoE is expected to cut rates while the Fed does not—a factor that favors the U.S. dollar. However, the question is whether the market is ready to respond to this or is content for now, simply closing out dollar shorts and continuing to trade based on Trump. In recent months, market movements have been anything but logical, and there's no guarantee that will change this week. The pound has barely held below the moving average and hasn't even broken its latest local high.

This image is no longer relevant

The average volatility of GBP/USD over the last five trading days stands at 98 pips, which is considered "average" for the pair. On Monday, May 5, we expect movement within a range bounded by 1.3167 and 1.3363. The long-term regression channel is pointing upward, indicating a clear bullish trend. The CCI indicator has formed a bearish divergence, which triggered the current decline.

Nearest Support Levels:

S1 – 1.3184

S2 – 1.3062

S3 – 1.2939

Nearest Resistance Levels:

R1 – 1.3306

R2 – 1.3428

R3 – 1.3550

Trading Recommendations:

The GBP/USD pair maintains a bullish trend but has settled below the moving average. We still believe there's no strong reason for the pound to rise. It's not the sterling gaining strength, but rather the dollar weakening—for two months now. And this decline is entirely Trump-driven. Therefore, Trump's actions can just as easily trigger a sharp downward move—or a renewed rally. If you're trading based purely on technical signals or Trump headlines, long positions remain relevant above the moving average, with targets at 1.3428 and 1.3550. Short trades are still appealing, with initial targets at 1.3184 and 1.3167. The dollar's four-day rally is already surprising many—it appears we are witnessing a technical correction.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD Overview – June 11. What Will Inflation Influence?

The GBP/USD currency pair fell sharply in the first half of Tuesday but retraced back to its original position in the second half. Traders may have assumed in the morning

Paolo Greco 03:31 2025-06-11 UTC+2

EUR/USD Overview – June 11: Even News About Negotiations Doesn't Help the Dollar

The EUR/USD currency pair continued trading sluggishly on Tuesday, maintaining an upward bias. The macroeconomic backdrop has been absent for two days in a row, but there have been some

Paolo Greco 03:31 2025-06-11 UTC+2

Japan Hopes for a Positive Outcome in Trade Negotiations—Otherwise, Recession and Rising Inflation Loom

The revised estimate of Japan's Q1 GDP showed that the economy contracted less than previously estimated, with consumption figures also revised upward. GDP declined by 0.2% year-over-year instead

Kuvat Raharjo 00:21 2025-06-11 UTC+2

GBP/USD: Labor Market Cools Down, But the Pound Holds Its Ground

The UK labor market data published on Tuesday turned out to be unfavorable for the pound. However, the GBP/USD pair is not rushing to dive downward, as the overall weakness

Irina Manzenko 00:21 2025-06-11 UTC+2

The Dollar Is Doomed, Though It Doesn't Know It Yet

In war, all methods are justified. U.S.–China trade negotiations are ongoing in London, and everything is being utilized—from education to rocket engines. Washington is prepared to make concessions, including lifting

Marek Petkovich 00:21 2025-06-11 UTC+2

The Dollar Stabilized, but It Won't Last Long

The latest CFTC report indicates that the sell-off of the U.S. dollar has either ended or is close to ending. The net short position against major currencies decreased by $1.094

Kuvat Raharjo 18:45 2025-06-10 UTC+2

No News Is Already Good News

Trade negotiations between the United States and China are set to continue for a second day, as both sides aim to ease tensions surrounding technology exports and rare earth elements

Jakub Novak 11:19 2025-06-10 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is under pressure, having failed to consolidate above the 1.1435 level and showing intraday declines toward the psychological level of 1.1400 and below, amid U.S. dollar

Irina Yanina 10:45 2025-06-10 UTC+2

Markets Hope for a Breakthrough in U.S.-China Trade Talks (Gold and GBP/USD May Continue Declining)

Markets have virtually come to a standstill in anticipation of the outcome of the trade negotiations between representatives of China and the United States. So far, there have been

Pati Gani 10:44 2025-06-10 UTC+2

The ECB Is Ready to Wait

The euro and the pound remain within a range against the U.S. dollar, experiencing some pressure following the first day of negotiations between China and the U.S. However, in addition

Jakub Novak 10:27 2025-06-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.