- GBP/USD edges higher for the second successive day, albeit lacks strong follow-through.
- Bets for further tightening by the BoE underpin the GBP and lend some support to the major.
- Hawkish Fed expectations act as a tailwind for the USD and might cap any meaningful gains.
The GBP/USD pair trades with a positive bias for the second successive day on Tuesday and touches a three-day high, around the 1.2770 area during the Asain session. Spot prices, however, remain confined in a familiar trading range held over the past three weeks or so. This warrants some caution before positioning for an extension of the recent bounce from a one-and-half-month low, around the 1.3615 area, also marking the 100-day Simple Moving Average (SMA) support.
Expectations that the Bank of England (BoE) will increase interest rates further continue to underpin the British Pound (GBP and act as a tailwind for the GBP/USD pair. In fact, the current market pricing indicates a more than 80% chance of a 25 bps lift-off at the next BoE meeting in September. The bets were lifted by the fact that wages in the UK touched a new record growth rate in the second quarter, which adds to worries about long-term inflation even after 14 consecutive rate hikes. Adding to this, the upbeat UK GDP report and slightly higher UK CPI print support prospects for further BoE policy tightening.
The US Dollar (USD), on the other hand, hovers just below its highest level in more than two months touched last week and holds back bulls from placing aggressive bets around the GBP/USD pair, at least for now. Growing acceptance that the Federal Reserve (Fed) will stick to its hawkish stance and keep interest rates higher for longer remains supportive of elevated US Treasury bond yields. Apart from this, a generally weaker risk tone is seen as another factor lending support to the safe-haven Greenback. The market sentiment remains fragile in the wake of concerns about the worsening economic conditions in China.
Investors might also prefer to wait on the sidelines ahead of Jackson Hole Symposium later this week, where comments by central bankers might infuse significant volatility in the markets and provide a fresh impetus to the GBP/USD pair. The focus will further be on the flash PMI prints from the UK and the US on Wednesday, which will provide cues about the economic health and whether the respective central banks can afford to increase interest rates further. In the meantime, traders on Tuesday will take cues from the US economic docket, featuring the release of Existing Home Sales and Richmond Manufacturing Index.
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
EUR/USD struggles to hold above 1.1000 after mixed EU data
EUR/USD is having a difficult time stabilizing above 1.1000 in the European session on Monday. The Eurozone Sentix Investor Confidence slumped to -19.5 in April while the annual February Retail Sales jumped 2.3%, limiting the pair's upside despite the broad US Dollar weakness.
GBP/USD reverses below 1.2900 despite US Dollar weakness
GBP/USD fails to sustain the recovery and reverses below 1.2900 in European trading on Monday. The pair shrugs off broad US Dollar weakness as risk sentiment takes a fresh hit, with European traders hitting their desks, weighing on the risk sensitive Pound Sterling.
Gold price holds above $3,000 amid a global meltdown; bulls seem non-committed
Gold price attracts some sellers near the $3,055 support-turned-resistance and stalls its intraday recovery from the $2,972-2,971 area, or a nearly four-week low touched earlier this Monday. Investors continue to unwind their bullish positions to cover losses from a broader meltdown across the global financial markets
Solana Price Forecast: Bears gain momentum as SOL falls below $100
Solana (SOL) extends its loss by over 7% and falls below the $100 mark at the time of writing on Monday after crashing 15.15% last week. Coinglass data shows that SOL’s leveraged traders wiped out nearly $70 million in liquidations in the last 24 hours.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
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.