The GBPUSD pair rebounded from a key swing level after the NFP report was softer than anticipated. This led to a broad USD sell-off, with markets adjusting expectations for monetary easing by the Federal Reserve.<\/p>\n
The market was initially anticipating 35 bps of easing by year-end, which shifted to 60 bps following the NFP report. Fed officials have suggested a possible rate cut in September, with more benign data likely influencing Fed Chair Powell at the Jackson Hole Symposium. Meanwhile, the ISM Services PMI’s rise in prices index could maintain trader caution before the US CPI release.<\/p>\n
The Bank of England is anticipated to cut interest rates by 25 bps, aligning with its quarterly strategy. UK data shows mixed results; inflation rose unexpectedly, while employment numbers fell short. The BoE is expected to continue its careful and data-dependent approach, with another rate cut predicted by year-end.<\/p>\n
In technical analysis, GBPUSD bounced from 1.3140, nearing a resistance at 1.3368. Sellers are likely to position for a price drop, while buyers aim for a higher breakout. Shorter timeframes show consolidation and resistance at 1.3310, with upcoming US Jobless Claims and BoE rate decision as key market catalysts.<\/p>\n
The recent weakness in US jobs data has changed our thinking, making a Federal Reserve rate cut in September look highly probable. Looking at the CME FedWatch Tool, the market is now pricing in a greater than 75% chance of a cut next month. This is a big swing in sentiment that makes shorting the US dollar attractive against other currencies.<\/p>\n
On the other side of the pair, the Bank of England is expected to cut rates tomorrow, August 7th, but their situation is different. The latest inflation report from the Office for National Statistics showed UK CPI remaining sticky at 2.9% in July, well above the 2% target. This means the BoE has to be more careful, making their path of rate cuts likely slower and more telegraphed than the Fed’s potential new direction.<\/p>\n
Given this uncertainty, especially with US inflation data next week and the Jackson Hole meeting later this month, volatility is our main focus. The Cboe’s GBP Volatility Index (BPVIX) has already crept up to a three-month high near 9.5 as traders prepare for bigger price swings. This suggests that using options, like straddles, could be a good way to profit from a sharp move without betting on the specific direction.<\/p>\n
For those looking to take a direct view, the technical levels provide a clear map for the next few weeks. We can look to sell the pair near the key resistance of 1.3368, but we must be nimble. The US Jobless Claims report tomorrow will be our next clue; data from last week showed claims holding steady around 217,000, indicating the labour market hasn’t completely fallen apart.<\/p>\n
We must remember how quickly the Fed can change its stance, as we saw during the regional banking stress back in 2023. That period showed us that once the Fed signals a major policy shift, it can lead to sustained dollar weakness. If GBP\/USD breaks convincingly above the 1.3368 resistance level, it could signal the start of a new upward trend.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBPUSD rebounds post-soft NFP, USD weakens; markets eye Fed, BoE rate cuts and key data releases.<\/p>\n","protected":false},"author":62,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28359","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28359"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17032"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}