Sterling erased the remainder of its August advance on Wednesday, with GBP\/USD sitting just under 1.3500 after a session low a shade beneath 1.3475. That leaves it about 1.5% below the late\u2011August peak short of 1.3700 and at its weakest level in three weeks, even as UK 10\u2011year borrowing costs have climbed above 5.20% for the first time since 2008 and the long end has also pushed to fresh eighteen\u2011year highs. The scheduled 17 September MPC decision is framed as both a rate event and a supply event because the annual plan for gilt sales is published alongside the policy decision, while expectations for Bank Rate have shifted only modestly: three of nine votes favoured 4% in July, and most forecasts still point to no change through year end. Attention is also on fiscal supply ahead of the first Budget on 28 October.<\/p>\n
In the US, the private payrolls print showed 38K for August versus a 47K consensus and a 46K prior, yet the Dollar held firm after a Jackson Hole message that inflation has not cooled meaningfully, lifting the implied odds of a 16 September hike to around two thirds. Crude has stayed above $90.00 amid renewed US strikes on Iranian targets and retaliation across the Gulf, while Factory Orders rose 0.9% in July against a 0.6% consensus, and the Beige Book is due at 18:00 GMT. Thursday brings ISM PMI at 14:00 GMT, seen at 54.3 versus 54.1, with prices paid previously at 70.3; jobless claims at 12:30 GMT are forecast at 205K versus 203K, and Challenger layoffs at 09:30 GMT follow 33.429K. Friday\u2019s payrolls are expected at 58K versus a prior 23K loss, with unemployment at 4.1% and earnings at 0.3% m\/m and 3% YoY; on the charts, resistance is 1.3500 then 1.3550 and the 50\u2011day EMA, while support sits at the 200\u2011day EMA near 1.3400, then 1.3350, 1.3300, 1.3200 and around 1.3150, with Stoch RSI rolling over from near 90.<\/p>\n
We advise derivative traders to position for continued downward pressure on GBP\/USD as we head into the volatile mid-September central bank sessions. The pound’s recent drop to under 1.3500, down 1.5% from its August peak, shows that surging UK bond yields are no longer supporting the currency. Instead, 10-year gilt yields climbing above 5.20% reflect growing investor anxiety over upcoming debt supply rather than attractive rate differentials.<\/p>\n
We recommend shorting GBP\/USD on any temporary rallies back toward the 1.3500 level, utilizing tight stop-losses just above 1.3550. With the 200-day Exponential Moving Average at 1.3400 acting as the final line of defense, a confirmed break below this level open doors for a swift run toward 1.3300. Recent market data shows UK public sector net debt has hovered around 98% of GDP, compounding fiscal fears ahead of the October Budget. <\/p>\n
On the other side of the pair, we see the US Dollar gaining strong momentum from stubborn inflation pressures and a resilient economy. Crude oil prices remaining firmly above $90 a barrel are keeping US inflation expectations high, which has doubled the implied probability of a Federal Reserve rate hike this month to over 65%. Traders should look to buy short-dated USD call options or set limit orders to sell GBP on rallies, as the macroeconomic backdrop heavily favors the greenback.<\/p>\n\n\n\n