Pound Sterling Extends Bullish Run
Pound Sterling Strengthens on Hopes of Fed Rate Cut
The Pound Sterling (GBP) traded higher on Wednesday against most major currencies, except the antipodeans, as overall market sentiment remained supportive of riskier assets. Strong expectations that the US Federal Reserve will cut interest rates in next week’s meeting have boosted the currency’s appeal.
Awaiting Key Domestic and Global Data In the United Kingdom, investors are awaiting the release of July’s Gross Domestic Product (GDP) and factory production data, scheduled for Friday. Forecasts suggest that monthly GDP growth may have stagnated in July after a 0.4% increase in June. Industrial and manufacturing output is also expected to have remained flat. Signs of slowing economic growth could strengthen market expectations for further interest rate cuts by the Bank of England (BoE) later this year. However, the BoE is widely expected to keep interest rates steady at 4% in next week’s policy meeting.
Calm US Dollar and Weak Labor Market Meanwhile, the US Dollar is trading steadily as investors digest the Nonfarm Payrolls (NFP) benchmark revision report, which showed that in the 12 months ending March 2025, the US economy created 911,000 fewer jobs than previously estimated.
GBP/USD Outlook and Upcoming Data The Pound is fluctuating around 1.3530 against the US Dollar. Traders are awaiting the US Producer Price Index (PPI) data for August, due at 12:30 GMT. Annual PPI is expected to rise by 3.3%, while core PPI is forecast at 3.5%, both slightly lower than the previous month. The US Consumer Price Index (CPI) for August will be released on Thursday and could help determine the Fed’s next policy move. According to the CME FedWatch tool, there is only an 8.4% probability of a 50-basis-point rate cut, with the majority of the market expecting a 25-basis-point reduction.
Technical Analysis From a technical perspective, GBP/USD is consolidating within an ascending triangle pattern. The horizontal resistance lies near 1.3585 (July 23 high), while the rising support trendline originates from the August 1 low at 1.3140. The 20-day Exponential Moving Average (EMA) is positioned around 1.3487, and the Relative Strength Index (RSI) is oscillating between 40 and 60, indicating a short-term neutral trend. On the downside, 1.3140 serves as a key support level, while on the upside, 1.3800 (July 1 high) is the major resistance to watch.