{"id":6525,"date":"2024-11-07T11:52:06","date_gmt":"2024-11-07T11:52:06","guid":{"rendered":"https:\/\/alchemymarkets.com\/?post_type=market_insights&p=6525"},"modified":"2025-05-13T07:21:43","modified_gmt":"2025-05-13T07:21:43","slug":"boe-fed-2024","status":"publish","type":"market_insights","link":"https:\/\/alchemymarkets.com\/sv\/education\/market-insights\/opening-bell\/boe-fed-2024\/","title":{"rendered":"Policy is King: All Eyes on BOE Gov Bailey and Fed Chair Powell"},"content":{"rendered":"\n

The GBP\/USD pair is set for some volatility as the Bank of England (BoE) and the Federal Reserve (Fed) prepare to announce their policy decisions. Market participants are closely watching how hawkish or dovish each central bank will be, as this will likely establish a clear direction for the pound-dollar exchange rate.<\/p>\n\n\n\n

Current Rates and Technical Setup<\/strong><\/h2>\n\n\n\n

With the BoE’s rate at 5% and the Fed’s effective rate at 4.75%, the pound currently has an advantage in terms of returns on interest. However, the technical picture shows mixed signals for GBP\/USD. In the short term, we see a 50\/50 probability for the pair\u2019s movement, though a bearish trend may dominate the medium term.<\/p>\n\n\n\n

Technical Breakdown: GBPUSD Weekly Chart<\/strong><\/h2>\n\n\n\n
For now, we think the price of GBP\/USD is in a 50\/50 scenario in the short term, bearish mid term. <\/mark><\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Bullish Scenario:<\/em><\/strong> <\/strong>GBP\/USD is testing a support level formed by the midline of an ascending channel, which could prompt further upside. If the pair rises, it could retest the upper trendline of this channel around $1.35. A rally like this would likely require a hawkish tone from the BoE and no surprises from the Fed that might strengthen the dollar, and in turn weaken the pound.<\/p>\n\n\n\n

Bearish Scenario: <\/em><\/strong>Conversely, the weekly chart is showing the candle approaching a close below the 20-week exponential moving average (EMA)<\/a>, a historically bearish signal. A close below this level could indicate a potential rollover, with GBP\/USD likely retesting recent lows or even the bottom of the ascending channel. If the channel were to break, we might see GBP\/USD revisit its 2023 low of $1.20 or its 2024 low near $1.22.<\/p>\n\n\n\n

The Market Has Likely Priced in the 25bps Rate Cut<\/h2>\n\n\n\n

Let\u2019s start with the Fed decision, which is somewhat easier to predict given current market sentiment.<\/p>\n\n\n\n

According to the CME FedWatch Tool, a 25-basis-point rate cut has a near-universal (98.9%) probability of occurring<\/strong>. Given these expectations, it’s likely that the rate cut is already priced in, with the dollar rally we\u2019re seeing likely driven by a surge in demand for U.S. assets\u2014spurred on by the recent electoral victory of Donald Trump. Some refer to this rally as the \u201cTrump Trade.\u201d<\/p>\n\n\n\n

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Source: CME Group Fedwatch Tool<\/em><\/p>\n\n\n\n

For GBP\/USD, the Fed decision will play a key role. Here\u2019s what to watch for:<\/p>\n\n\n\n