CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• GBP/USD nears 1.3239, with potential to test the YTD high at 1.3266 and March 2022 peaks.
• Bulls bought the dip at 1.3001, fueling the rally to current levels.
• Failure at 1.3200 could see a pullback towards 1.3150, with further downside risks at 1.3100 and 1.3044.

The Pound Sterling rallied in early trading during the North American session against the Greenback, registering gains of over 0.60% and hitting a five-day peak of 1.3214. At the time of writing, the GBP/USD trades at 1.3199.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has risen sharply, as bullish momentum picked up, as portrayed by the Relative Strength Index (RSI). In addition, bulls buying the dip at 1.3001 lifted spot prices to the current exchange rate.

Still, GBP/USD remains shy of testing the September 6 high of 1.3239. In that outcome, the next resistance level would be the year-to-date (YTD) high at 1.3266. Once surpassed, the daily high on March 23, 2022, would be up for grabs at 1.3298 before the pair hits the March 1, 2022, high at 1.3437.

Conversely, if GBP/USD stands below 1.3200, this could exacerbate a re-test of the 1.3100 figure. But firstly, sellers need to challenge 1.3150. Further losses lie at 1.3044, and the July 17 high turned support.

GBP/USD Price Action – Daily Chart

• GBP/USD kicks off the new week on a positive note amid the prevalent USD selling bias.
• Rising bets for a 50 bps Fed rate cut and the upbeat market mood undermine the buck.
• Bulls might refrain from placing aggressive bets ahead of the key central bank event risks.

The GBP/USD pair attracts some dip-buying on the first day of a new week amid relatively thin trading conditions on the back of a holiday in China and Japan. Spot prices currently trade around the 1.3135-1.3140 region, up just over 0.10% for the day and remain close to a one-week high touched on Friday amid the prevalent US Dollar (USD) selling bias.

The USD Index (DXY), which tracks the Greenback against a basket of six currencies, languishes near the YTD low set in August amid expectations for a more aggressive policy easing by the Federal Reserve (Fed). In fact, traders are pricing in a greater chance that the US central bank will lower borrowing costs by 50 basis points (bps) later this week after data released last week provided further evidence that inflation in the US was subsiding. This keeps the US Treasury bond yields depressed near the 2024 low and the USD bulls on the defensive. 

Apart from this, a generally positive risk tone further undermines the Greenback's relative safe-haven status. The British Pound (GBP), on the other hand, benefits from expectations that the Bank of England (BoE) will loosen policy by less than the Fed over the next year. The markets, however, are still betting on more BoE rate cuts, especially after data released last week pointed to a slowdown in the UK wage growth and a flat GDP print for the second straight month in July. This might hold back bulls from placing aggressive bets around the GBP/USD pair. 

Investors might also prefer to move to the sidelines ahead of this week's key central bank event risks. The Fed is scheduled to announce its decision at the end of a two-day policy meeting on Wednesday. This will be followed by the BoE meeting on Thursday, which will play a key role in influencing the next leg of a directional move for the GBP/USD pair. Nevertheless, the fundamental backdrop favors the USD bears and supports prospects for an extension of the pair's bounce from the 1.3000 psychological mark, or a multi-week low touched last Wednesday.

• GBP/USD resumes uptrend, bouncing off 1.3114, with bullish momentum supported by a rising RSI.
• A break above 1.3150 could target 1.3200 and the September 6 high at 1.3239, followed by the YTD high of 1.3266.
• Downside risks include a drop below 1.3114, which would expose 1.3100, with further support at 1.3031.

The GBP/USD edges higher during the North American session, registering gains of over 0.18%, due to increasing expectations that the US Federal Reserve could cut rates by 50 basis points next week. At the time of writing, the pair trades at 1.3147 after bouncing off daily lows of 1.3114.

GBP/USD Price Forecast: Technical outlook

The GBP/USD resumed its uptrend, as buyers stepped in once the pair hit a weekly low of 1.3001. Momentum is bullish, as depicted by the Relative Strength Index (RSI), aiming up after dipping to the 50 neutral line. This and further US Dollar weakness, paves the way for further upside.

If GBP/USD climbs decisively above 1.3150, it will expose the psychological figure of 1.3200. Once surpassed, the next stop would be 1.3239, the September 6 high, ahead of the year-to-date (YTD) high of 1.3266.

Conversely, if sellers drive price action below the 1.3114 daily low, this will expose 1.3100. On further weakness, the next support would be Thursday’s low of 1.3031.

GBP/USD Price Action – Daily Chart

• GBP/USD attracts buyers for the second straight day amid dovish Fed-inspired USD weakness.
• Expectations that the BoE will cut rates less than the Fed also contribute to the positive move.
• Bulls might now opt to move to the sidelines ahead of the Fed and the BoE meetings next week. 

The GBP/USD pair gains positive traction for the second straight day and recovers further from over a three-week low, around the 1.3000 psychological mark touched on Wednesday. The momentum lifts spot prices to mid-1.3100s, or a fresh weekly top during the Asian session, and it is sponsored by the heavily offered tone surrounding the US Dollar (USD). 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, sinks to over a one-week low amid rising bets for a larger interest rate cut by the Federal Reserve (Fed), bolstered the softer US Producer Price Index (PPI) report on Thursday. Dovish Fed expectations keep the US Treasury bond yields depressed near the 2024 low, which, along with the upbeat market mood, undermines the safe-haven buck and acts as a tailwind for the GBP/USD pair. 

Bulls, meanwhile, seem unaffected by bets for more interest rate cuts by the Bank of England (BoE), especially after data released this week pointed to a slowdown in the UK wage growth and a flat GDP print for the second straight month in July. The markets, however, think that the BoE will loosen policy by less than the Fed over the next year. This, in turn, benefits the British Pound (GBP) and turns out to be another factor lending additional support to the GBP/USD pair. 

It, however, remains to be seen if bulls can capitalize on the move or refrain from placing aggressive bets ahead of next week's key central bank event risks. The Fed is scheduled to announce its policy decision at the end of a two-day policy meeting next Wednesday. This will be followed by the crucial BoE meeting on Thursday, which will play a key role in providing some meaningful impetus to the GBP/USD pair and determining the next leg of a directional move.

• GBP/USD climbed back over 1.3100 after mid-week slump into 1.3000.
• US PPI inflation figures didn’t spark significant moves, but kept Fed rate cut hopes pinned.
• Market’s see an overwhelming likelihood of a quarter-point Fed cut next week.

GBP/USD turned higher on Thursday, rising back above the 1.3100 handle after the Greenback went limp amid a broad-market uptick in risk-on market sentiment. US Producer Price Index (PPI) inflation data wrapped around median market estimates, failing to deliver a concise picture of US price growth factors, but still kept market expectations of an impending Federal Reserve (Fed) rate cut keel-side down.

Forex Today: An impasse is likely ahead of the FOMC meeting

Friday will deliver only mid-tier Consumer Inflation Expectations from the UK side, while US markets will be looking out for another print of the US Michigan Consumer Sentiment Index for September. Markets will be looking for one last improvement in the key consumer outlook survey before heading into next week’s looming Fed rate call.

US PPI rose to 0.2% MoM in August, with core PPI accelerating to 0.3% MoM. Headline PPI was forecast to rise to 0.1% from the previous 0.0%, while core PPI was expected to rise to 0.2% from July’s -0.2% contraction. Despite the near-term upswing, annualized PPI inflation figures were much more attractive to investors, with YoY headline PPI easing to 1.7% from the previous period’s revised 2.1%, and ticking below the expected 1.8%. Core annualized PPI also beat the expected print, holding steady at 2.4% YoY versus the expected 2.5% uptick.

US Initial Jobless Claims also rose slightly higher for the week ended September 6, increasing to the expected 230K from the previous week’s revised 228K. 

With PPI inflation remaining tame and the number of unemployment benefits seekers holding firmly in tepid territory, little lies in the way of a first rate cut from the Federal Reserve (Fed) on September 18. The Fed is broadly expected to deliver a 25 bps cut to kick off 2024’s late-starting rate cut cycle. According to the CME’s FedWatch Tool, rate markets are pricing in over 80% odds of the Fed cutting by a quarter point next week, with a slim 20% still leaning into hopes for an initial double-cut for 50 bps. Rate traders also overwhelmingly expect the Fed to deliver four cuts in total, with December’s rate call expected to land between 425 and 450 bps.

GBP/USD price forecast

GBP/USD took advantage of the Greenback’s Thursday weakness, climbing back above the 1.3100 handle after dipping below the key figure earlier this week. Cable staunched the bleed in the mid-week, bounding just north of the 1.3000 round figure.

Price action continues to lean firmly into the bullish side, with bids trading well above the 50-day Exponential Moving Average (EMA) at 1.2970. Short pressure has still kept bidding below recent multi-year highs just north of 1.3250, however an extended decline to the 200-day EEMA at 1.2757 is looking increasingly unlikely.

GBP/USD daily chart

• GBP/USD bounces from a daily low of 1.3031, with momentum turning bullish as RSI points upward.
• Bulls need to clear resistance at 1.3111 and 1.3143 to target the key psychological level of 1.3200.
• A drop below 1.3000 would expose the 50-DMA at 1.2953, with further support at 1.2872 and 1.2810 (100-DMA).

The Pound Sterling advanced modestly against the US Dollar on Thursday after economic data showed that factory inflation in the United States (US) was a tick higher than foreseen. That and a softer US jobs report weighed on the buck. The GBP/USD trades at 1.3078 after hitting a daily low of 1.3031.

GBP/USD Price Forecast: Technical outlook

After diving to a three-week low of 1.3001, the GBP/USD bounced off and sat within the mid 1.3000-1.3100 range after UK economic data showed the economy is cooling.

Momentum shows buyers stepping into the market as the Relative Strength Index (RSI), which, at the brisk of turning bearish, made a U-turn, aiming up.

If bulls want to regain control, they must reclaim the September 11 peak of 1.3111. This would expose the current week’s peak at 1.3143, followed by 1.3200.

Conversely for a bearish continuation, if GBP/USD tumbles below 1.3000, the first support would be the 50-day moving average (DMA) at 1.2953. On further weakness, the next stop would be the August 13 high turned support at 1.2872, ahead of challenging 1.2810, the 100-DMA.

GBP/USD Price Action – Daily Chart

August’s RICS House Price Balance data strengthened to +1%, well ahead of July’s –18% and the forecast of –14%, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP is consolidating for the time being

“The data (reflecting the difference between agents reporting higher house prices minus those reporting a fall) was the strongest in close to two years. Details in the report were strong as well, suggesting that expectations of lower interest rates has given the UK housing market a significant lift.”

“Cable is holding a narrow range well withing yesterday’s spot range. This implies some moderation at least in short-term pressure on the pound. Support is 1.3000 intraday while resistance is 1.3110.”

• GBP/USD tallied another day of losses falling below 1.3050.
• US CPI came in mixed and markets reduced the odds of a 50 bps cut.
• Earlier in the session the UK reported weak GDP figures.

The GBP/USD pair remains under pressure, trading near 1.3045 as the market reacted to the latest US inflation data. Economic activity released during the European session seems to have added pressure on the pound.

While the headline inflation declined, annual core CPI, which excludes volatile food and energy prices, remained unchanged at 3.2% in August, in line with market expectations. However, on a monthly basis, both CPI and core CPI rose by 0.2% and 0.3%, respectively, exceeding market forecasts. The data has led traders to reduce the odds of a 50-basis-point rate cut by the Federal Reserve and the market is now pricing in an 85% chance of a 25-basis-point cut.

What weakened the GBP was the report of soft Gross Domestic Product (GDP) releases during the European sessions. Despite this, leading indicators point to a potential rebound in UK economic activity, suggesting that the Bank of England is unlikely to cut rates by more than the currently anticipated 50 basis points by year-end, which could provide some support for the GBP.

GBP/USD Technical Outlook

The GBP/USD pair's decline to 1.3045 reflects deepening bearish pressure, with key technical indicators like the Relative Strength Index (RSI) pointing down near 50 and the Moving Average Convergence Divergence (MACD) firmly positioned in negative territory. This suggests that bearish sentiment could persist in the short term especially if the RSI breaks the 50 barrier.

• GBP/USD drops below the 20-DMA, with sellers gaining near-term control as RSI nears a break below 50.
• Key support lies at 1.3044 (July 17 peak), with further downside risks toward 1.2995 (50-DMA) and 1.2894 (March 8 high).
• Buyers need to hold above 1.3150 for a recovery, targeting resistance at 1.3111 and the psychological level of 1.3200.

The Pound Sterling dropped during the North American session, down 0.30% after UK data showed the economy is slowing down. This and a pick-up in US inflation weighed on the GBP/USD, which trades at 1.3035 after reaching a daily high of 1.3111.

GBP/USD Price Forecast: Technical outlook

The uptrend remains intact, but the GBP/USD drop below the 20-day moving average (DMA) gives sellers an edge in the near term.

The Relative Strength Index (RSI) clings to the bullish side, but a break below the 50-neutral line looms, which could accelerate the downfall and threaten to clear key support levels.

If GBP/USD clears 1.3050, the first support would be the July 17 peak at 1.3044. On further weakness, the pair might drop to the 50-DMA at 1.2995. A breach of the latter will expose the March 8 daily high at 1.2894.

Conversely, if buyers hold the spot price above 1.3150, that could pave the way for a recovery. The first resistance would be 1.3111, followed by the 1.3150 psychological level, ahead of cracking the 1.3200 figure.

GBP/USD Price Action – Daily Chart

• GBP/USD falls after the release of US CPI data shows headline inflation falling but core remaining stubbornly high. 
• The data suggests the Fed will take a cautious approach to easing and probably cut rates by 25 not 50 bps.
• GBP is pressured after UK GDP comes out flat in July and misses estimates.  
   

GBP/USD is trading marginally lower in the 1.3060s on Wednesday after the release of US inflation data leads to an appreciation in the US Dollar (USD) amid prospects of a more measured approach to easing from the Federal Reserve (Fed) whilst the Pound Sterling (GBP) loses ground following the release of flat economic growth data. 

US consumer prices rose more or less in line with expectations, although the annual change in the headline Consumer Price Index (CPI) did undershoot economists’ expectations by a point, coming out at 2.5% instead of the 2.6% forecast, according to data from the US Bureau of Labor Statistics on Wednesday. 

Core CPI (ex food and energy) also rose as expected but monthly core CPI rose by a higher-than-expected 0.3% suggesting some stubbornness in core prices, which analysts say comes from sticky dwelling inflation. 

Although the data was mixed, it showed inflation remaining sufficiently high for the Fed not to want to slash interest rates at its next meeting but rather adopt a more measured approach. The probabilities of a “jumbo” 50 basis points (bps) cut at the September 17-18 Fed meeting fell to only 15% after the release, from around 27% before. A 25 bps (0.25%) cut remains fully priced in. 

“Overall, inflation appears to have been successfully tamed but, with housing inflation still refusing to moderate as quickly as hoped, it hasn’t been completely vanquished. Under those circumstances, we expect the Fed to take a measured approach to cutting interest rates,” remarked Paul Ashworth, Chief North America Economist at Capital Economics. 

With the chances of the larger cut in US interest rates dwindling, the USD strengthened (GBP/USD fell), since relatively higher interest rate expectations are usually supportive of a currency because they lead to higher foreign capital inflows. 

Data out of the UK, meanwhile, painted a negative picture of the economic outlook for the country, weighing on Cable. The Gross Domestic Product (GDP) growth rate in July failed to rise (0.0%) when economists had expected a 0.2% increase, according to data from the Office of National Statistics (ONS) on Wednesday. Industrial and manufacturing production both came out below-expectations, with the former falling 0.8% month-over-month and negative 1.2% annually in July, and the latter declining 1.0% and 1.3% respectively.

The Pound Sterling (GBP) is little changed and underperforming on the session as a result, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP gains are capped in the low 1.31 area

“UK GDP was flat in July (below expectations of a 0.2% rise) and rose 0.5 in the July quarter (a little below forecasts of 0.6%). Details were generally softer than expected or outright weak (manufacturing).”

“The data suggest some slowing in growth momentum after a more positive H1 but do not alter near-term prospects for the BoE, with markets continuing to price in the low risk (4-5bps) of a rate cut this month.”

“Soft price action intraday continues to cap GBP gains in the low 1.31 area. More range trading seems likely in the short run, with trend signals at very weak and neutral levels. Support is 1.3050/60. Resistance is 1.3115.”

The Pound Sterling (GBP) could retest the 1.3050 level before a more sustained rebound is likely. In the longer run, GBP is expected to weaken further; the next level to watch is 1.3000, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

May target 1.3000 below 1.3050

24-HOUR VIEW: “We indicated yesterday that GBP ‘is likely to continue to weaken, potentially to 1.3035.’ However, GBP fell less than expected to 1.3049, rebounding to close largely unchanged (1.3080, +0.05%). While downward momentum is beginning to slow, GBP could retest the 1.3050 level before a more sustained rebound is likely. The major support at 1.3000 is unlikely to come under threat. Resistance is at 1.3105, followed by 1.3120.”

1-3 WEEKS VIEW: “We highlighted two days ago (09 Sep, spot at 1.3130) that GBP ‘could drift lower, possibly reaching 1.3050.’ Yesterday (10 Sep, spot at 1.3070), we highlighted that GBP ‘is expected to weaken further and the next level to watch is 1.3000.’ In NY trade, GBP fell to a low of 1.3049. From here, as long as 1.3140 (no change in ‘strong resistance’ level from yesterday) is not breached, we will continue to hold the same view.”

• GBP/USD attracts buyers for the second straight day amid a modest USD weakness.
• The intraday uptick loses steam following the disappointing release of UK macro data.
• The downside seems limited as traders await the release of the crucial US CPI report.

The GBP/USD pair builds on the overnight modest bounce from the 1.3050-1.3045 region, or over a three-week trough and gains some follow-through positive traction for the second successive day on Wednesday. Spot prices, however, struggle to capitalize on the move beyond the 1.3100 mark and retreat a few pips in the last hour following the release of the UK macro data.

The UK Office for National Statistics reported that the economic growth remained flat for the second straight month in July as compared to expectations for a modest 0.2% growth. Moreover, the UK Industrial and Manufacturing Production unexpectedly shrank during the reported month. This comes on top of a slowdown in the UK wage growth, which lifts bets for more interest rate cuts by the Bank of England (BoE) and undermines the British Pound (GBP). 

The US Dollar (USD), on the other hand, attracts some sellers and for now, seems to have snapped a three-day winning streak back closer to the monthly peak amid dovish Federal Reserve (Fed) expectations. This, in turn, offers some support to the GBP/USD pair and helps limit the downside for the GBP/USD pair. Traders also seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the US consumer inflation figures.

The crucial US Consumer Price Index (CPI) report should influence market expectations about the size of the rate cut by the Fed at its upcoming policy meeting on September 17-18. This, in turn, will play a key role in driving the USD demand in the near term and provide some meaningful impetus to the GBP/USD pair. Nevertheless, the aforementioned fundamental backdrop warrants some caution before positioning for a further appreciating move for the currency pair.

• GBP/USD attracts some buyers on Wednesday amid a modest USD decline.
• The fundamental backdrop warrants before placing aggressive bullish bets.
• Traders might also prefer to wait for the release of the crucial US CPI report.

The GBP/USD pair regains positive traction during the Asian session on Wednesday and climbs to a fresh daily peak, closer to the 1.3100 round-figure mark in the last hour. Spot prices, however, remain below the overnight swing high, warranting some caution before positioning for any meaningful recovery from a three-week low, around the 1.3050-1.3045 region touched the previous day. 

The US Dollar (USD) stalls its positive trend witnessed over the past three days and retreats from the vicinity of the monthly top amid the prospects for an imminent start of the Federal Reserve's (Fed) policy-easing cycle in September. This, in turn, is seen as a key factor lending some support to the GBP/USD pair. That said, a generally weaker tone around the equity markets could help limit losses for the Greenback and cap the currency pair amid bets that the Bank of England (BoE) will announce more interest rate cuts this year.

The UK Office for National Statistics (ONS) reported on Tuesday that the number of people claiming unemployment-related benefits increased by 23.7K in August as compared to the 102.3K previous and well below the 95.5K expected. Adding to this, the ILO Unemployment Rate expectedly ticked lower from 4.2% to 4.1% in the three months to July. That said, a slowdown in the UK wage growth was seen as positive news for inflation and might provide the UK central bank with increased confidence regarding cutting interest rates further. 

Traders might also refrain from placing aggressive bullish bets around the British Pound (GBP) ahead of the UK data dump, including the monthly GDP print, and the latest US consumer inflation figures. The crucial US Consumer Price Index (CPI) report will play a key role in influencing market expectations about the Fed's rate-cut path. This, in turn, will drive the USD demand in the near term and provide a fresh directional impetus to the GBP/USD pair.

• GBP/USD remains under pressure near 1.3050 as cautious market sentiment overshadows the brief recovery sparked by UK employment data.
• US CPI data will be Wednesday’s highlight.
• Markets will also follow Tuesday’s US presidential debate.

The GBP/USD pair remains on the defensive, slipping toward 1.3050 during the American session. Despite a temporary boost from positive UK employment data earlier in the day, the pair struggles to hold its ground amid a cautious market atmosphere.

On Tuesday, the UK's Office for National Statistics (ONS) revealed that the ILO Unemployment Rate slightly decreased to 4.1% for the three months ending in July, down from 4.2%, aligning with market expectations. Employment figures showed significant improvement, with an increase of 265,000 jobs during the same period, compared to the previous rise of 97,000. Meanwhile, annual wage growth, as indicated by the Average Earnings Excluding Bonus, slowed to 5.1% from 5.4%.

The upcoming US inflation data will be in focus this week, with the August Consumer Price Index (CPI) set to be released on Wednesday. Headline inflation is anticipated to ease to 2.6% YoY, down from 2.9% in July, while core inflation is expected to hold steady at 3.2% YoY. On Thursday, Producer Price Index (PPI) data is expected to show a decrease in headline inflation to 1.7% YoY, compared to 2.2% in July. Meanwhile, expectations for Federal Reserve easing have stabilized, with the likelihood of a 50 basis point rate cut this month dropping to 20-25%. The market continues to anticipate 100-125 basis points of easing by the end of the year, with no Fed speakers scheduled until Chair Powell’s press conference on September 18.

GBP/USD Technical Outlook

The GBP/USD has fallen below the 20-day Simple Moving Average which paints the outlook with bearishness, at least for the short-term. However, as the pair holds the 100 and 200-day  SMAs the overall outlook remains positive.

In the meantime, indicators including the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) flattened in negative areas, suggesting that the current bearish pressure is not a threat.

GBP/USD Daily chart

• GBP/USD slips towards key support at 1.3044, with momentum favoring further downside in the short term.
• RSI is turning bearish, signaling potential losses, with next support at 1.3000 and the 50-DMA at 1.2940.
• For buyers to regain control, GBP/USD must clear resistance at 1.3143 and push towards 1.3200.

The GBP/USD is on the backfoot after spiking to a daily high of 1.3107 after a solid UK jobs report, though it has retreated below the 1.31 handle as traders await the release of US inflation data. At the time of writing, the pair trades at 1.3052, down 0.17%

GBP/USD Price Forecast: Technical outlook

The GBP/USD fall toward the July 17 peak at 1.3044 could exert downward pressure on the pair and pave the way for further losses.

Momentum favors sellers in the short term. The Relative Strength Index (RSI) remains bullish, though its slope is aiming down and about to turn bearish, which could accelerate Sterling’s fall against the Greenback.

In that scenario, the GBP/USD path of least resistance is tilted to the downside. The first support would be 1.3044, followed by the psychological figure of 1.3000. A breach or the latter will expose the 50-day moving average (DMA) at 1.2940, ahead of the 1.2900 mark.

Conversely, if buyers would like to regain control, they must clear the September 9 high at 1.3143 before having the chance of challenging the 1.3200 figure.

GBP/USD Price Action – Daily Chart

The Pound Sterling (GBP) has crept a little higher over the course of the trading day so far. UK data showed in line with expectations wage growth (4.0% Y/Y for Average Weekly Earnings in the July quarter, 5.1% for ex-bonus pay) and a marginal fall in the unemployment rate (4.1%, from 4.2%) over the same period,

Intraday trend signals are neutral

“Policymakers will welcome slower wage growth but gains are still too rich to be compatible with the BoE’s inflation target. Swaps are pricing in marginally less risk of an already unlikely BoE cut next week as a result (4bps of easing versus 5-6bps yesterday).”

“Like other pairs, there are negative daily and weekly prints on the GBP charts which suggest downside risks in the near-term. Like other pairs though, the GBP/USD charts also reflect a lot of residual bullish momentum via oscillator studies which are curbing downside impulses for now.”

“Short-term patterns on the GBP/USD look corrective after the August rally in the pound. c, suggesting more range trading with a mild downside bias for now. Support is 1.3050/60. Resistance is 1.3110 and 1.3145/50.”

The Pound Sterling (GBP) is expected to continue weaken, potentially to 1.3035. The major support at 1.3000 is unlikely to come under threat, UOB Group FX strategists Quek Ser Leang and Peter Chia note.

Falling below 1.3035 may target 1.3000

24-HOUR VIEW: “When GBP was at 1.3130 yesterday, we noted that ‘there has been a slight increase in downward momentum.’ We were of the view that GBP could dip below 1.3100 but we indicated that ‘any decline is not expected to reach 1.3060.’ While our view of a lower GBP was correct, it fell more than expected to 1.3068. Not unexpectedly, the decline has led to an increase in momentum, and today, we continue to expect GBP to weaken, potentially to 1.3035. The major support at 1.3000 is unlikely to come under threat. To keep the momentum going, GBP must remain below 1.3115 with minor resistance at 1.3090.”

1-3 WEEKS VIEW: “Yesterday (09 Sep, spot at 1.3130), we noted that ‘the recent price action has resulted in a modest increase in downward momentum.’ We highlighted that ‘as long as 1.3250 is not breached, we expect GBP to drift lower, possibly reaching 1.3050.’ We added, ‘the likelihood of GBP breaking clearly below this level seems low for now.’ We did not expect GBP to drop as much and as quickly as it fell to a low of 1.3068 in NY trade. From here, we continue to expect GBP to weaken. The next level to watch is 1.3000. We will hold the same view provided that 1.3140 (‘strong resistance’ level was at 1.3250 yesterday) is not breached.”

• GBP/USD depreciates as recent US jobs data reduced the odds of an aggressive Fed rate cut in September.
• The CME FedWatch Tool indicates that the likelihood of a 50 bps rate cut has slightly decreased to 29.0%.
• The upcoming UK labor market report could significantly influence market expectations regarding the BoE’s policy outlook in 2024.

GBP/USD extends its losing streak for the third successive day, trading around 1.3060 during the Asian session on Tuesday. The downside of the pair could be attributed to the improved US Dollar (USD), which received support as recent US labor data raised uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting.

According to the CME FedWatch Tool, markets are fully anticipating at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. The likelihood of a 50 bps rate cut has slightly decreased to 29.0%, down from 30.0% a week ago.

Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee remarked on Friday that Fed officials are starting to align with the broader market's sentiment that a policy rate adjustment by the US central bank is imminent, according to CNBC.

In the United Kingdom, investors are closely watching the employment data for the quarter ending in July, which is scheduled for release on Tuesday. This labor market report could significantly influence market expectations regarding the Bank of England's (BoE) interest rate decisions for the remainder of the year.

Projections indicate that the ILO Unemployment Rate might edge down to 4.1% from 4.2%. Meanwhile, Average Earnings, including bonuses, are expected to slow to 4.1%, down from the previous 4.5%. A slowdown in wage growth could strengthen expectations for additional interest rate cuts by the Bank of England, as it may signal a potential easing of inflationary pressures in the services sector.