GBP/USD Softens to Near 1.3450 as Markets Await Key PMI and Fed Insights

The GBP/USD pair faces downward pressure, trading near 1.3450 during Thursday’s Asian session. This softening comes amid a modest rebound in the US Dollar, as markets await the latest data on US and UK economic performance, with particular focus on the upcoming Purchasing Managers’ Index (PMI) reports. These releases, along with the Federal Reserve’s annual Jackson Hole Symposium, could provide fresh insights on the Fed’s monetary policy trajectory, influencing the US Dollar and, by extension, the GBP/USD pair.

US Dollar Rebounds Amid Diminishing Rate Cut Expectations

The recent jump in US wholesale prices has reduced the likelihood of an immediate Fed rate cut, leading to a slight recovery in the US Dollar. Markets, however, are still anticipating some rate reductions later in the year, with the CME FedWatch tool indicating a near 80% probability of a 25-basis-point rate cut in September. As the US Dollar gains ground against the Pound Sterling, investors look ahead to the Jackson Hole Symposium for any hawkish comments from Fed Chair Jerome Powell that could bolster the Greenback further.

UK Inflation Hits 2024 High, Impacting Bank of England’s Rate Outlook

In the UK, inflation data showed a 3.8% year-on-year rise in July, surpassing both June’s 3.6% and market expectations of 3.7%. This uptick in inflation, particularly the core CPI which excludes food and energy, suggests that inflationary pressures remain persistent in the UK. Despite this, markets do not expect immediate rate cuts from the Bank of England (BoE), as rate reduction expectations have shifted further into 2026.

The Bank of England’s cautious stance may offer some support to GBP/USD, though the pair faces potential resistance from continued US Dollar strength. With both inflation and interest rate expectations impacting the outlook, investors will closely monitor further developments, including the BoE’s future moves and any signals from the US Federal Reserve.

Market Outlook: Awaiting PMI Data and Jackson Hole Symposium

As the week progresses, the GBP/USD pair will be influenced by the upcoming PMI data, set to offer clues on the economic health of both the UK and the US. The Jackson Hole Symposium, where Fed Chair Jerome Powell is expected to speak, will be a key event. Any hints from Powell on the Fed’s future rate policy could act as a strong catalyst for the US Dollar and provide further direction for GBP/USD.

Key Levels to Watch:

• Resistance: The GBP/USD pair may face resistance near the 1.3500 mark, with the psychological level of 1.3550 being the next significant hurdle.
• Support: Immediate support lies at 1.3400, with a potential dip toward 1.3350 if bearish momentum persists.

As markets remain uncertain, with the GBP/USD pair struggling to gain direction, the economic data from both sides of the Atlantic will be pivotal in shaping future trends. Keep an eye on inflation figures, central bank commentary, and the geopolitical landscape, all of which will contribute to volatility in the GBP/USD currency pair.

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