The US dollar rebounded strongly on Friday, especially against the commodity dollars on the back of disappointment from China’s latest stimulus announcement. The euro and pound drifted lower throughout the day, with the EUR/USD testing a multi-month low beneath the 1.07 handle. The pound, which had rallied following the Bank of England’s decision to cut interest rates on Thursday, remained on the front foot against the euro, sending the EUR/GBP pair to near a 2-year low of around 0.8300 by Friday’s European close. But the cable was held back by the US dollar, which despite giving a big chunk of its post-election gains on Thursday, rebounded strongly on Friday, giving a bearish GBP/USD forecast for the week ahead.US dollar rebounds amid growth optimism The greenback found support on the back of a stronger UoM Consumer Sentiment data, which showed an improvement to 73.0 from an upwardly revised 70.5 reading the month before. Meanwhile, investors were still digesting the impact of Trump’s victory and the Fed’s decision to cut rates by 25 basis points on Thursday. The Fed Chair Powell was tight-lipped about whether it would slow down the pace of rate cuts in light of the Republican’s clean sweep victory and what that might mean in terms of fiscal policy. But despite Thursday’s selling, investors refused to turn bearish on the dollar meaningfully, amid expectations of increased spending and tax cuts under Trump. This, together with stronger data on Friday (Consumer Sentiment), helped to push the dollar higher again and sent the GBP/USD back below 1.29 handle. BoE’s “gradual” tightening not enough to lift GBP/USD forecastIn as far as the Bank of England’s rate decision was concerned, well they too cut rates by 25 basis points, but warned that it can’t lower rates “too quickly or by too much.” Governor Bailey refrained from defining what “gradual” would mean for the pace of future cuts, something the central bank had mentioned in the rate statement. This helped to push the GBP/USD higher on Thursday, which was aided by a sharp drop in the US dollar amid profit-taking from the Trump victory gains. By Friday, however, it was business as usual as the pair resumed lower thanks to a rebounding US dollar. Week ahead: UK GDP and US CPI coming up The focus is now turning to CPI data from both the UK and US in the week ahead.Last month saw CPI come in slightly ahead of expectations, printing 2.4% y/y for September versus 2.3% expected, albeit it was down from 2.5% the month before. This helped to keep the dollar on the front foot leading up to the US presidential election. With Trump’s resounding victory and his plans for tariffs and tax cuts set for 2025, inflation may remain elevated in the US and prevent the Fed from loosening its belt further. In light of that risk, the Fed and the markets may again start paying closer attention to US inflation data. A stronger data could help pressurise the likes of EUR/USD and other currencies subject to tariffs under Trump. The GBP/USD could also drop, should CPI provide US dollar find more reason to rally.As mentioned, the Bank of England lowered rates by 25 basis points to 4.75% last week, and Governor Bailey refrained from defining what “gradual” would mean for the pace of future cuts. It is clear a lot will now depend on incoming data, putting this week’s data dump into a sharp focus. As well as monthly and quarterly GDP estimates, we will have various other economic indicators released at the same time. The UK growth data will be watched closely by GBP traders. The recent budget is expected to lift inflation slightly, adding around 0.5% to CPI at its peak according to the BoE. However, the BoE isn’t expecting significant economic growth from this budget. As it stands, the Bank intends to continue cutting rates gradually over the coming months. This should keep the GBP under pressure. But if we see improvement in UK data, then this could support the GBP/USD forecast.Last week, the GBP/USD held below the key 1.30 handle after breaking below it. For as long as it now holds below this level, the path of least resistance will remain to the downside, unless we see a major reversal pattern at lower levels first to help turn the technical GBP/USD forecast bullish. Incidentally, the 1.30 handle is also where the backside of the broken trend line that had been in place since rates bottomed in September 20222, when Liz Truss’s mini budget debacle had sent the GBP plunging. In terms of potential support levels to watch, well, as before, the area between 1.2780 to 1.2870 is now quite important for this pair. Here, old support and resistance converge with the technically important 200-day moving average. Below this zone, this’s year’s opening level of 1.2731 comes into focus, followed by the August low at 1.2665.