GBPUSD Prediction: The Pound Strengthened By Labour Win, Dollar Under Rate Cut Pressure

Summary:
• The GBPUSD is on the upward momentum as the Labour Party's landslide win boosts investor confidence, while the dollar looks to NFP data.

GBPUSD stayed elevated on Friday, gaining 0.1 percent in the European session to trade at 1.2773. The pair was on course to record the fourth consecutive daily gain, and was up by 1 percent on the weekly chart. The US dollar is under pressure from major currencies on expectations that the Fed will likely start slashing interest rates from September.

The US economy churned out mixed results this week, signing out for the Independence Day holiday break with forecast-beating S&P Global Services PMI reading and higher-than-expected Initial Jobless Claims figures. Also, the ADP Nonfarm Employment Change came in at 150k in June, missing the forecast figure of 163k. Meanwhile, the sterling pound remains under pressure from the June S&P Global / CIPS UK Construction PMI, which came in at 52.2 on Thursday, declining from May’s 54.7 and falling short of the forecast 54.0. 

The Labour Party decisively won Thursday’s UK General Elections, with Keir Stamer set to be the new Prime Minister. The landslide victory by the Labour Party was a tough indictment on the Conservatives’ economic policies, and has renewed investor confidence in the UK economic performance going forward. That development has strengthened the pound, and will provide near-term support.

Meanwhile, the June FOMC Meeting Minutes released on Wednesday showed that FOMC members will need more proof that inflation is cooling down before voting to cut the 5.25-5.50% interest rates that have been in place since July 2023.  US inflation cooled in May as per last week’s PCE Price Index figures, shifting the focus to the jobs market. The June Non Farm Payrolls figures will be out later on Friday, and traders will pick cues from it in relation to the next probable course of action by the Fed.

Technical analysis

The momentum on GBPUSD signals that the buyers are currently in control, with the pivot at 1.2775. The upside will likely prevail if the exchange rate stays above that mark, with the first resistance likely to come at 1.2781. A move past that mark will strengthen the upward momentum to potentially encounter the next barrier at 1.2785. However, if the sellers could take control if the pair breaks below 1.2775. That could see the first support established at 1.2770, beyond which the downward momentum could be strengthened and the upward momentum invalidated. Furthermore, it could result in extended declines to test 1.2766.