Today market outlook

[Zeologic]

GBP/USD will focus on today's Bank of England (BoE) policy announcement.

Yesterday, the GBP/USD currency pair drew a fairly long-bodied bullish candle, reflecting a weakening USD. The GBP/USD price formed a high of 1.33681, a low of 1.32815, and a close of 1.33557 on FXOpen's platform.

The US dollar continued its downtrend and plunged to a multi-day low on Wednesday, as investors remained wary of President Trump's plans for Chairman Powell's replacement and developments on the trade front ahead of the upcoming deadline. The DXY, which measures the USD's performance against six major currencies, fell 0.51%, crossing the 20-EMA from the upside, reaching a low of 98.128 from a high of 98.837.

The Bank of England (BoE) is expected to cut interest rates by 25 basis points at its August 7 meeting, from 4.15% to 4.00%. This cut is expected due to high inflation of 3.6% in June, but the UK economy is showing signs of weakness and a weakening labor market, with unemployment rising to 4.7%. This is part of the longest and most gradual cycle since World War II.

US economic data shows a weak July Nonfarm Payrolls (NFP) figure of just 73,000 jobs, a significant negative revision from the previous month. The July ISM services index (ISM) was only 50.1, indicating stagnation in the service sector. Market expectations are starting to include the potential for a Fed rate cut in September, with a probability of over 75%. Comments from Fed officials, such as Governor Mary Daly, who recently indicated that two rate cuts in 2025 are appropriate. These types of statements can influence expectations regarding the Fed's policy path.

If Fed officials' comments are more hawkish, the US dollar could strengthen. Conversely, dovish comments or weaker data could weaken the USD.

On August 7, the US will release data on initial and continuing jobless claims, as well as productivity and unit labor costs. These figures will provide subtle clues about the health of the US labor market and inflationary pressures.

The potential for volatility remains high in GBPUSD ahead of the BoE announcement. Market reaction is focused not only on the interest rate cut but also on the BoE's future outlook.

Technically, the support levels of 1.3300 and 1.3140 are expected to be key, while resistance levels around 1.3400 and 1.3585 will be targets for bulls if the BoE surprises with a hawkish tone.