UK elections support GBPUSD growth to 1.2890

The GBPUSD quotes are rising on Thursday after weak economic data from the US raised hopes for an interest rate cut by the Federal Reserve (Fed) in September.

Wednesday's macro statistics, including the services sector and ADP employment reports, showed a slowdown in the economy. Another report indicated an increase in initial claims for unemployment benefits in the US last week. Traders now await Friday's Non-Farm Payrolls (NFP) data.

However, at the last Fed meeting, the officials admitted that the US economy is slowing. Therefore, they took a wait-and-see approach before making any commitments to lower rates, as the minutes of the meeting on June 11–12 showed. According to the CME FedWatch Tool, markets are now pricing in a 74% chance of monetary policy easing by the Fed at its upcoming meeting in September.

In addition, the growth of the currency pair may be driven by market optimism amid Thursday's general elections in the UK. In accordance with Survation forecast, the Labour Party may win a record number of seats in the national elections. The UK is poised to elect Labour Party leader Keir Starmer as its next prime minister, replacing Conservative Rishi Sunak after his party's 14 years in power.

Labour's victory could have a positive impact on the pound. A significant majority will provide Labour with a solid mandate to govern the country.

On the technical level, the GBPUSD quotes are forming a wide correction on the D1 timeframe. The Bulls Power and Bears Power indicators (standard values) are in the positive zone, confirming the strength of the bullish momentum and the formation of a buying trend.

Signal:

The short-term outlook for the GBPUSD currency pair suggests buying. 

The target is at the level of 1.2890.

Part of the profit should be taken near the level of 1.2815.

A stop-loss could be placed at the level of 1.2600.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.