- GBP/USD attracts some buying for the second straight day and is supported by a softer USD.
- The divergent Fed-BoE policy outlook might keep a lid on any meaningful appreciating move.
- Traders now look to the final UK GDP for a fresh impetus ahead of the US Core PCE Price Index.
The GBP/USD pair gains some positive traction for the second successive day on Friday and looks to build on the previous day's goodish recovery from the vicinity of its lowest level since March 17. Spot prices trade around the 1.2220 region during the Asian session and draw support from a mildly softer tone surrounding the US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, remains depressed below the YTD peak set earlier this week and is pressured by Thursday's rather unimpressive US macro data. The final estimate published by the US Bureau of Economic Analysis (BEA) showed that the US expanded by a 2.1% annualized pace during the second quarter, in line with market expectations. Furthermore, the Labor Department reported that Initial Jobless Claims rose by 2,000 to 204K during the week ended September 23. This, along with a modest fall in the US Treasury bond yields and a stable performance around the equity markets, undermines the safe-haven buck and acts as a tailwind for the GBP/USD pair.
The US macro data, however, still pointed to a resilient economy and ensured that the Federal Reserve (Fed) would keep interest rates higher for longer. This should help limit the downside for the US bond yields and lend support to the Greenback. Traders might also refrain from placing aggressive directional bets and prefer to wait for the release of the US Core PCE Price Index – the Fed's preferred inflation gauge. The US central bank warned last week that still-sticky inflation in the US was likely to attract at least one more interest rate hike by the end of this year. Hence, the data will influence expectations about the Fed's future rate-hike path, which, in turn, should provide a fresh impetus to the USD and drive the GBP/USD pair.
Heading into the key data risk, traders might take cues from the release of the final UK GDP print, though the immediate market reaction to a positive surprise is more likely to remain limited on the back of the Bank of England's surprise pause in its rate-hiking cycle earlier this month. Moreover, the UK central bank provided little hints of its intends to raise rates any further. This, in turn, warrants some caution for bullish traders and positioning for any further appreciating move for the GBP/USD pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom ahead of the 1.2100 round-figure mark.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold jumps to new record-high above $3,220 as China ramps up tariffs on US goods
Gold extends its relentless rally and trades at a new all-time high above $3,220 in the European session on Friday. The precious metal benefits from safe-haven flows following China's decision to raise additional tariffs on US imports to 125% from 84%.
EUR/USD climbs to fresh multi-year high above 1.1400 on intense USD weakness
EUR/USD continues to push higher and trades at its strongest level since February 2022 above 1.1400 in the European session on Friday. The US Dollar (USD) stays under heavy pressure after China raised tariffs on US imports in retaliation, fuelling the pair's upsurge.
GBP/USD extends the advance to near 1.3100 as USD selloff picks up steam
GBP/USD preserves its bullish momentum and advances to near 1.3100 in the European session. The persistent USD weakness remains the main market theme as fears over the deepening China-US trade conflict triggering a recession in the US continue to grow.
Bitcoin, Ethereum and Ripple show weakness while XRP stabilizes
Bitcoin and Ethereum prices are hovering around $80,000 and $1,500 on Friday after facing rejection from their respective key levels, indicating signs of weakness. Meanwhile, Ripple broke and found support around its critical level; maintenance suggests a recovery on the cards.
Trump’s tariff pause sparks rally – What comes next?
Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.