GBP/USD Stages Modest Rebound Above 1.3200, But Upside Likely Limited by Fed and BoE Outlook

The British Pound (GBP) edged higher against the US Dollar (USD) during Thursday’s Asian session, lifting GBP/USD above the mid-1.3200s after hitting a one-month low. However, despite this mild recovery, the pair lacks strong bullish momentum as key fundamental headwinds remain intact.

Fed’s Hawkish Pause Supports USD Strength

The US Dollar continues to benefit from the Federal Reserve’s hawkish tone. While the Fed kept interest rates unchanged on Wednesday, Chair Jerome Powell offered no signals of a rate cut in September. Strong US economic data further buoyed the greenback—private payrolls rose by 104,000 in July, and Q2 GDP expanded at a solid 3.0% annualized rate.

These developments suggest limited room for USD downside, making it difficult for GBP/USD to sustain a broader recovery.

BoE Rate Cut Bets Weigh on Sterling

On the UK front, rising expectations that the Bank of England will lower rates by 25 basis points at its August 7 meeting continue to dampen GBP demand. The dovish shift in BoE policy outlook, coupled with global trade uncertainties, is likely to keep the British Pound on the defensive.

Technical Outlook: Recovery Faces Resistance

Technically, GBP/USD’s break below the 100-day Simple Moving Average (SMA) earlier this week triggered fresh bearish momentum. While spot prices now trade above 1.3250, the path higher remains fraught with resistance.

Key Event Ahead: US PCE Inflation Data

All eyes now turn to the upcoming US Core PCE Price Index—Fed’s preferred inflation gauge—set for release later Thursday. The data is expected to influence near-term USD sentiment and drive volatility in GBP/USD.

Conclusion

GBP/USD may see brief upticks, but without a clear shift in fundamental drivers—especially from the Fed or BoE—bullish attempts are likely to face stiff resistance near the 1.3300–1.3350 zone. Traders should remain cautious ahead of key US inflation data.

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