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GBPUSD Price Analysis: Pound Rallies Against the Weak Dollar

Simon Mugo trader
Updated 1 Dec 2022

The GBPUSD currency pair was trading over 239 pips at writing, starting the last month of the year on a high note despite the lack of news released from the UK docket.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


The weak US dollar fueled the currency pair’s rally following dovish comments from Fed Chair Jerome Powell that boosted risk assets.

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Most investors are counting on a 50 basis point rate hike from the Fed at its December meeting as multiple Fed speakers commented in favor of slowing down the rate hikes. 

The Fed Chair went a step further to say that the Fed may pause rate hikes as it assesses the economic situation in the country since it does not want to be forced to slash interest rates. Given the aggressive rate hikes implemented by the Fed this year, a pause is long overdue. 

Investors bid up risk assets, including the British pound, as the demand for the safe haven dollar weakened, given the dovish outlook regarding rate hikes. The markets are also watching tomorrow’s upcoming nonfarm payroll data, with many expecting weak figures. 

Earlier today, the release of the latest US Personal Consumption Expenditure (PCE) data also contributed to the dollar’s weakness since the inflation data was in line with expectations. The core PCE print monitored by the Fed remained at 5.0%, which was expected.

However, some analysts warn that investors should not assume that the Fed has now embraced a fully-dovish outlook since core inflation remains high at 5.0%. Still, the good news is that the inflation print is not rising. 

The Fed may keep hiking rates simply because the US economy is much stronger than its peers, led by the UK and the EU, struggling with a rising cost of living crisis. 

Investors’ focus remains on tomorrow’s NFP data, which could surprise the markets if it is higher than expected, given the disappointing ADP employment data released yesterday. 

*This is not investment advice. 

GBPUSD price chart.

The GBPUSD currency pair was trading up 239.2 pips (1.9%), starting the month on a high note.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading