Key Points
- GBP/USD trades at 1.34395, up 0.05%, after recovering from early August lows.
- Speculators hold $2.78 billion in short positions against the pound, reversing from bullish positioning since February.
The GBP/USD pair is trading at 1.34395, up 0.00072 or 0.05%, showing resilience after a pullback from the July peak of 1.37887.
The daily chart shows the pair recently bounced off the 1.3000 area, with moving averages (5, 10, 30) tightening and the MACD histogram turning positive, hinting at a shift in momentum.
The rebound follows months of steady gains from February’s low near 1.20997, a rally of more than 11% before the July correction.
On the macro side, Japanese stocks have hit all-time highs, buoyed by a 90-day extension of the US-China tariff truce.
This move prevents triple-digit duties and removes short-term uncertainty, though it was largely priced in by the markets. Australian equities stayed near record highs, while AUD/USD eased after the Reserve Bank of Australia delivered a widely expected 25-basis-point cut.
For the pound, trader focus turns to UK labour market data due Tuesday. Pay growth in July is expected to remain steady at 5%, but hiring intentions have slipped to their weakest levels since the COVID-19 pandemic, with starting pay rising at the slowest pace in over four years.
Four of nine Bank of England policymakers opposed last week’s 25-basis-point cut to 4%, suggesting rate policy remains contentious. Traders have largely removed expectations of another cut this year, which could lend support to sterling.
However, speculative positioning tells a different story. Commodity Futures Trading Commission data shows $2.78 billion in net short positions against the pound, marking a sharp reversal from bullish sentiment earlier this year.
This reflects lingering concerns about UK growth and the economy’s ability to sustain the currency’s 7% year-to-date rise.
In the US, the inflation report later today will be critical. Markets will parse the data to assess the impact of President Trump’s tariffs on consumer prices and the Federal Reserve’s path for interest rate cuts.
Any upside surprise in inflation could curb expectations for aggressive easing, potentially strengthening the dollar and limiting GBP/USD’s upside.
Technical Analysis
GBP/USD has been in a broad uptrend since February 2025, climbing from around 1.21 to a peak near 1.378 in July before retracing to the 1.30 area. The recent bounce has brought the pair back toward 1.344, with the shorter-term moving averages starting to turn higher, suggesting some recovery in momentum.
The MACD is showing signs of a potential bullish crossover, which could confirm further upside if price action holds above the 1.3400 mark.
In the near term, the pair is likely to test resistance around 1.345–1.350, with a break above opening the door toward 1.3550. Failure to clear this zone could see a pullback toward 1.3300 support. Price direction will be sensitive to upcoming US CPI data and any shifts in BoE rate expectations.
Cautious Forecast
Short-term momentum points to further upside towards 1.3500 if UK labour data meets or beats expectations and US inflation comes in softer than forecast. However, failure to clear 1.3500 could see the pair stall, with risk of a pullback towards 1.3300 if US data surprises to the upside or UK growth signals weaken further.
