Pound Sterling (GBP) has regained the ground against the US dollar (USD), although within the trading range on August 22nd. The GBP/USD pair gradually roamed over the updated 1.3500 barrier on the upside.
Sterling vibrated in range
GBP/USD went into concatenated mode after a delayed rebound last week. The bull’s tug of war was extended, but buying bargains continued to become popular, courtesy of a widespread US dollar decline.
USD booked a monthly drop after holding a double whammy in hand from a tremendous forecast over the Federal Reserve. Meanwhile, concerns over the Fed’s independence have deprived investors of their trust in the US currency.
This week’s commentary from Dovish Fed confirmed that Jerome Powell-led chairman of interest rate cuts next month.
“Rates are likely to fall at some point, but policymakers will need to see how future data will show the economy to determine whether the cuts next month are appropriate,” New York President John Williams said Wednesday.
Late Thursday, Gov. Governor Christopher Waller said he would support rate cuts at the September meeting and further cuts in the next three to six months to prevent the labor market from collapse.
According to CME Group’s FED Watch Tool, the market maintained its expectations for rate cuts in September in the 85% to 90% range.
Going forward, the drama between President Donald Trump and the federal government has intensified since Trump announced earlier this week that he was planning to fire federal government Governor Lisa Cook over a false statement about his mortgage application.
However, Cook stood on her ground and said Trump had no authority to remove her. Cook filed a lawsuit against Trump’s efforts to fire her on Thursday.
Meanwhile, comments from US Vice President JD Vance in a USA Today interview on Thursday confirmed the end of the Fed’s autonomy.
On Friday, Bloomberg reported that British Prime Minister Rachel Reeves could increase his income by imposing blown taxes on commercial lenders to recover profits he has earned from taxpayers in deposits held at the Bank of England (BOE).
GBP/USD was unable to affect pound sterling as GBP/USD maintained mercy on USD dynamics prior to the release of the Core Personal Consumption Expense (PCE) Price Index, a measure of the Fed’s priority inflation.
The Bureau of Economic Analysis (BEA) reported that the annual PCE price index rose 2.6% in July, consistent with market expectations and printing in June. The Core PCE Price Index, which excludes unstable food and energy prices, rose 2.9% in the same period as forecast, following a 2.8% increase in June. The data failed to trigger a serious response, so GBP/USD struggled to regain its traction towards the weekend.
US labor data to obtain center stage
Traders will prepare for a surge in the US’s best economic data releases in a week that has been shortened to another holiday. This time, the US market was closed on Monday in compliance with Labor Day.
The UK Data Docket has no shocking publications until Friday. Therefore, all eyes are on the other side of the Atlantic for fresh trading incentives.
U.S. employment data could drip from Wednesday. However, on Tuesday, the Supply Management Institute (ISM), which manufactures PMI data, is also eagerly waiting.
On Wednesday, we will pave the way for Thursday’s Automatic Data Processing (ADP) employment change report, featuring the US Jolz Job Opening Survey.
Regular weekly unemployment claims also fell on Thursday, with ISM Services PMI continuing.
Calendars are busiest on Fridays, with UK retail sales being sold to cards. Later that day, US Non-Agricultural Payroll (NFP) will be published along with other details from the monthly employment report, including unemployment rates and average hourly earnings.
The market also monitors geopolitical, trade development and speeches from Fed policymakers to influence risk sentiment and ultimately sterling in the US dollar and pound.
GBP/USD: Technical Outlook
The GBP/USD daily chart shows that the double-top inversion stopped again at around 1.3420 at the confluence of the 21-day Simple Moving Average (SMA) and 100-day SMA.
The 21-day SMA was then closed on Thursday beyond the 100-day SMA, checking the Bull cross and opening the doors upside down more.
The 14-day relative strength index (RSI) is cheating with the midline and buyers should be careful.
Looking ahead, it is important to regain acceptance beyond the 50-day SMA at 1.3496. The following related topside hurdles are found at double top highs of nearly 1.3590.
Additionally, buyers challenged a high of 1.3681 on July 4th, followed by 1.3788 (high of 1 July).
On the downside, a solid break below the 21-day SMA and 100-day SMA Confluence zone is currently close to 1.3450, potentially driving new downtrends towards the HE 1.3300 round figure.
Due to the additional decline, the August 4th low could introduce 1.3254 to tests.
Disclaimer
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