GBP/USD tests 1.33 as Greenback weakness prevails

• GBP/USD continues to test fresh 30-month highs.
• Fed rate cut sparks broadbase Greenback selloff.
• BoE held rates despite early summer cut, UK Retail Sales in the pipe.

GBP/USD found a fresh 30-month high bid on Thursday, with a broad-market selloff in the US Dollar sparking a risk bid in Cable and bolstering the Pound Sterling. The Federal Reserve’s (Fed) 50 bps cut this week helped galvanized global markets into a risk-on stance, while the Bank of England’s (BoE) fearful rate hold did little to spark further strength under the GBP.

The only datapoint of note on Friday will be UK Retail Sales for August, though not much momentum is likely to come of it with investors exhausted after a double-header of central banks between the Fed and the BoE. UK MoM Retail Sales in August are expected to tick down to 0.4% from the previous 0.5%, while the annualized figure is expected to hold steady at 1.4%.

The BoE held interest rates steady at 5.0% early Thursday, with the Monetary Policy Committee (MPC) voting seven-to-one for another rate hold. The BoE initially opened the gates to rate cuts earlier in the summer with a quarter-point cut at the last meeting, but the move may have proved to be premature. BoE policymakers are waiting to see how the UK economy unfolds before making further rate adjustments.

On the US data side, Initial Jobless Claims eased back to 219K for the week ended September 13, down from the previous week’s revised 231K and under the median market forecast of 230K. The Philadelphia Fed Manufacturing Survey for September also printed well above expectations, with the spread index of manufacturing conditions improving to 1.7 from the previous seven-month low of -7.0 and handily beating the expected print of -1.0.

Fed Chair Jerome Powell convinced markets that the Fed’s outsized jumbo cut of 50 bps this week wasn’t a snap response to deteriorating economic conditions but rather an attempt to get ahead of the curve and bolster the US labor market. Powell successfully floated a rebranding of an entire half-percentage-point cut as a “recalibration,” and investors rewarded the Fed’s latest narrative pivot by plowing cash into risk assets across the board and yanking the rug out from beneath the safe-haven US Dollar.

GBP/USD price forecast

Despite clipping into a fresh 30-month high on Thursday and crossing the 1.3300 handle, Cable bidders have struggled to push price action deep into bull country, and markets will enter the Friday wrapup with prices hovering near the key psychological level. A firm bullish trend is still baked into daily candlesticks with the pair climbing above the 50–day Exponential Moving Average (EMA) near 1.3000.

GBP/USD daily chart