GBP/USD Faces Stern Test as NFP, CPI, FOMC and BoE Loom Large

investing.com:

Next week, the GBP/USD faces a major test with key data releases and interest rate decisions from the Federal Reserve and Bank of England.

Meanwhile, the US Dollar Index is fluctuating, with this week's indicators suggesting a potentially stronger dollar.

For now, the focus has shifted to the labor market with jobless claims and nonfarm payrolls data taking center stage.

The GBP/USD will be facing a big test, starting on the final day of this week and pretty much the whole of next. We have several key data releases from both sides of the pond to look forward to, including the US nonfarm payrolls report on Friday and CPI data next.

In addition, both the Federal Reserve and Bank of England will be making their respective interest rate decisions next week. While everything could hinge on the outcome of these macro events, it is worth noting that the GBP/USD has been tracking the stock markets closely, rising in November along with the big rally in major indexes.

Although the start of this month has seen the US indexes pause for a breather, the DAX has continued to ascend to new all-time highs. So, the underlying long-term trend in stocks is still arguably bullish and once the phase of profit-taking abates, the bullish trend may well resume for cable, irrespective of the short-term volatility as a result of the upcoming macro events.

After a positive start to the week, the US Dollar Index was down in the early European session on Thursday, falling back below the 104.00 handle. Much of the DXY’s losses were attributed to the Japanese yen. The yen rallied across the board after the BoJ Governor Ueda met PM Kishida, which gave rise to speculation that the BoJ might be ending its negative interest rates policy.

But leaving the