Key Points:
- GBP/USD is trading at 1.3505, down 0.18% after stalling below its July peak of 1.3788.
- Markets expect US CPI to rise 2.9% YoY for August; a hot print could delay Fed cuts.
- UK GDP is forecast at 0.0% YoY on Friday; any upside surprise may lift sterling.
The GBPUSD pair hovered near the 1.3500 handle on Thursday morning, with little directional conviction as traders awaited a one-two punch of economic releases from both sides of the Atlantic.
Today’s spotlight is firmly on the August US Consumer Price Index (CPI), expected to come in at 2.9% year-on-year. This would mark an uptick from July’s 2.7% and support the view that inflation is still moving higher, albeit gradually.
If the CPI comes in line with expectations or lower, the Fed will likely maintain course toward a 25 basis point cut next week. However, a strong surprise to the upside could complicate that trajectory.
According to CME FedWatch data, market participants have already priced in a more than 90% chance of a rate cut at the Federal Reserve’s 16–17 September policy meeting.
But inflation remains the wild card—any deviation from the expected CPI print could reshuffle the deck on rate path assumptions.
UK GDP Eyed as Sterling Awaits Second Shoe
On Friday morning, the UK enters the spotlight with its own major macro release: Gross Domestic Product (GDP). Economists anticipate 0.0% year-on-year growth, effectively flat.
Any surprise to the upside—even mild expansion—would boost the pound, as it would offer a glimmer of economic resilience despite global headwinds and domestic uncertainty.
So far, GBP/USD has had a strong year. The pair is up around 8% since the start of January, showing resilience against both dollar strength and sluggish UK growth.
This performance is underpinned by strong technical structure, with price trading comfortably above the 50-day, 100-day, and 200-day moving averages.
Technical Overview
The GBP/USD pair is trading at 1.3505, down -0.18% on the day, slipping slightly after failing to hold above recent consolidation.
Technically, the pair remains in a medium-term uptrend from its February 2025 low at 1.2332, though momentum has cooled since the July peak of 1.3789.
The 50-day moving average has flattened, suggesting sideways consolidation, while the MACD sits close to the zero line, showing limited momentum either way.
Key support lies at 1.3400, with further downside risks if broken toward 1.3250. On the upside, immediate resistance is at 1.3600, followed by 1.3789 (July high). Sustained trade above 1.3600 could reignite bullish momentum.
Cautious Forecast
In the short term, GBP/USD is expected to remain range-bound between 1.3450 and 1.3600 ahead of the dual macro releases.
A CPI print below expectations could trigger immediate dollar weakness and push the pair toward 1.3620. Conversely, hotter inflation would strengthen the greenback and pressure cable lower.
Looking further ahead into the medium term, a resilient UK GDP print would offer a solid floor for the pound, especially if the Bank of England stays hawkish amid sticky services inflation.
If both UK and US data come in weak, GBP/USD could struggle to break out of its current 1.33–1.36 range and may stagnate as traders wait for further policy clarity from both central banks.
