Key Takeaway: The British Pound strengthens above the 1.3300 level as the US Dollar continues to face pressure from growing expectations of a Fed rate cut in September. Investors now shift focus to the upcoming Bank of England (BoE) policy decision and commentary from Federal Reserve officials.
📉 GBP/USD Edges Higher Amid Dovish Fed Bets
The GBP/USD currency pair is trading near 1.3370 during Wednesday’s American session, staying within the upper range of its tight weekly band. The US Dollar (USD) remains on the defensive as markets continue to price in a rate cut by the Fed in September, with over 90% probability, according to the CME FedWatch Tool.
The latest ISM Services PMI report showed the index slipped to 50.1 in July from 50.8 in June. More importantly, the Employment Index fell to 46.4, signaling weakness in hiring, while the Prices Paid Index jumped to 69.9, reflecting sticky inflation. However, the mixed tone of the data failed to spark any meaningful demand for the Dollar.
🇬🇧 Focus Shifts to BoE Rate Decision: Will GBP Sustain Gains?
The Bank of England is widely expected to cut its benchmark interest rate by 25 basis points, bringing the rate down to 4.00%. According to analysts, seven out of nine Monetary Policy Committee (MPC) members are projected to support the cut, while two may vote for keeping rates unchanged.
Analysts at TD Securities note that markets will closely watch the vote split and any hints on the future pace of easing. “Any unexpectedly dovish tone, especially in light of recent soft UK data, could trigger weakness in the Pound,” they added.
📊 GBP/USD Technical Outlook: Neutral Bias Within Channel Range
From a technical standpoint, GBP/USD is currently trading within a neutral range on the 4-hour chart, as reflected by the flat RSI and price movement between the 20-period and 50-period SMAs.
Support Levels
- 1.3250 – Midpoint of descending channel
- 1.3200 – Key psychological and static level
- 1.3130 – Lower limit of descending channel
Resistance Levels
- 1.3300 – Static level and 50-period SMA
- 1.3330 – Previous support turned resistance
- 1.3390–1.3400 – Upper boundary of ascending channel and 100-period SMA
The pair’s ability to stay above 1.3300 will be crucial for sustaining bullish momentum. A breakout above 1.3400 could reinforce the bullish outlook, while failure to hold above 1.3250 may trigger fresh downside.
🔄 Outlook: GBP/USD Faces Crosswinds From Fed and BoE Policy Signals
- GBP/USD remains supported by USD weakness, but BoE’s dovish risk could limit upside if future rate cuts are signaled.
- Market focus will remain on Fed commentary as policymakers prepare for potential easing in September.
- A shift in tone from either central bank could set the direction for GBP/USD in the short term.
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