🔻 Summary
- The British Pound (GBP) is trading lower against the US Dollar (USD), around 1.3485, amid signs of slowing UK business growth and a stronger USD.
- Market sentiment favors the USD after hawkish signals from Fed officials and disappointing UK economic indicators.
📉 UK Business Growth Slows in September
- UK S&P Global Flash Composite PMI (Sep):
- Actual: 51.0
- Forecast: 52.7
- Previous: 53.5
- Implication: UK business activity expanded, but at a slower pace.
- UK Manufacturing PMI:
- Actual: 46.2
- Forecast: 47.0
- A reading below 50.0 signals contraction.
- UK Services PMI:
- Actual: 51.9
- Forecast: 53.5
- Previous: 54.2
- Indicates slower service sector growth.
➡️ Reasons for slowdown:
- Weaker demand due to global trade tensions and US-imposed tariffs.
- Signs of job losses and reduced new business orders.
🏦 BoE Outlook Remains Cautious
- The Bank of England (BoE) held rates steady at 4.0% last week.
- Guidance remains “gradual and careful” amid elevated inflation.
- BoE expects inflation to peak around 4% in September.
- BoE Chief Economist Huw Pill expects inflation to ease soon.
🇺🇸 Fed Officials Send Mixed Signals
- Fed Chair Jerome Powell (Tuesday):
- Warned that further rate cuts are not guaranteed.
- Described a “challenging situation” balancing inflation and labor market.
- Said current rates are “well-positioned” to adapt to economic changes.
- Fed Governor Michelle Bowman:
- Called for faster rate cuts if the labor market weakens further.
- Warned: “If demand doesn’t improve, layoffs could increase.”
➡️ Result: USD strengthens as market leans toward Fed holding or slowly easing.
💱 GBP Currency Performance
- The Pound Sterling is underperforming major currencies.
- Weakest against: Australian Dollar (AUD)
- Slight gains vs: Japanese Yen (JPY) and Swiss Franc (CHF)
| Base/Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.32% | 0.08% | — | 0.12% | -0.09% | -0.53% | -0.08% | -0.02% |
🧭 Technical Analysis: GBP/USD Under Bearish Pressure
- Current price: ~1.3485
- Trades below 20-day EMA, acting as resistance near 1.3523
- GBP/USD is nearing the lower trendline of a Rising Channel at ~1.3470
- RSI (14-day): Below 50 — bearish bias
- RSI drop below 40 would confirm stronger downside momentum
Support levels:
- 1.3470 – Rising channel support
- 1.3140 – August 1 low
Resistance levels:
- 1.3523 – 20-day EMA
- 1.3800 – July 1 high
📅 Upcoming Events to Watch
- Thursday: US Durable Goods Orders (Aug)
- Friday: US Core PCE Price Index (Fed’s preferred inflation gauge)
These releases could influence the next move in GBP/USD.
🧠 Fed Policy Key Points
- Mandate: Price stability (2% inflation target) & full employment.
- Tools: Primarily interest rate changes, and quantitative easing/tightening (QE/QT).
- Rate hikes → Stronger USD
- Rate cuts/QE → Weaker USD
- QT → Reduces money supply, strengthens USD