GBP/USD Price Forecast: Pound at 1.3559 Faces Fed Risk, Resistance at 1.3595

GBP/USD Holds Gains at 1.3559 as Fed Rate Cut Looms

The British pound to U.S. dollar pair (GBP/USD) enters the new week at 1.3559, only marginally lower on the day but still near its recent highs. Over the past two months, sterling has battled through resistance repeatedly, climbing off summer lows near 1.3333 to challenge the 1.3592 zone last Tuesday. That level, just shy of the 1.3600 handle, has become a psychological pivot for traders. The Federal Reserve’s September meeting now dominates the landscape, with markets fully pricing a 25-basis-point cut in the Federal Funds Rate. The FedWatch tool shows probability above 90%, while speculation of a deeper 50-basis-point move remains unlikely given Powell’s cautious stance.

Fed Policy and Market Positioning Set the Tone

Large institutions have already placed bets around the Fed’s expected move, absorbing much of the bullish impulse. Unless Powell signals clearly that another cut will follow in October, sterling could face pressure even if the expected cut arrives. A message of hesitation or mixed forward guidance would see GBP/USD drift lower as profit-taking accelerates. Since July, each rally attempt toward 1.3600 has met resistance and selling pressure, underscoring how fragile bullish conviction remains.

Technical Landscape Defines Risk and Reward

The pair trades comfortably above its 200-day SMA at 1.3087, confirming long-term bullish bias, while short-term positioning leans on the 50-day SMA at 1.3464. Key resistance sits at 1.3587–1.3595, the recent swing top, with further levels at 1.3648/50 and then 1.3745/49, matching yearly highs. Support is layered at 1.3504 (monthly open), 1.3417/32, and 1.3370, the June low. Failure to hold above the 1.3500 region would signal exhaustion and trigger stops, opening downside tests. But so far, buyers have stepped in quickly on dips, maintaining a bullish structure.

Institutional Demand vs Inflation Concerns

Sterling’s advance has not come without skepticism. U.K. GDP data showed stagnation in July, and inflation remains sticky near twice the Bank of England’s target. Still, financial institutions prefer GBP exposure as long as the Fed is in cutting mode. U.S. PPI fell –0.1% MoM in August against expectations of a 0.3% rise, reinforcing disinflation trends and justifying policy easing. That macro backdrop favors sterling in the near term, especially as ECB policy pauses and leaves the euro less attractive.

Day Trading Risks into FOMC Statement

Short-term players should be aware of heightened volatility around the Fed’s Wednesday announcement. GBP/USD has shown sharp swings during intraday sessions, with ranges expanding to 1.3509–1.3750 in speculative forecasts. Holding open positions through the announcement could expose traders to rapid reversals. The safest strategy has been to cash out on moves toward 1.3590–1.3600 resistance rather than hold in hope of a breakout that has repeatedly failed.

Comparisons with Other Majors Highlight Sterling’s Edge

The U.S. Dollar Index (DXY) sits at 97.61, under its 50-day average at 98.12 and trending lower. EUR/USD has broken above 1.1735 and eyes 1.1788–1.1830, but sterling offers stronger momentum above its 200-day base. USD/JPY holds at 147.67, capped by resistance at 149.13, while USD/CAD consolidates around 1.3844. Against this backdrop, sterling’s ability to press higher shows relative strength, especially with dollar softness amplified by expectations of at least two Fed cuts before year-end.

Verdict: GBP/USD Near-Term Bullish but Capped at 1.3600

The facts point to a currency pair supported by Fed easing, disinflation in the U.S., and institutional demand, yet capped by technical ceilings and cautious forward guidance. At 1.3559, GBP/USD trades close to key resistance. A breakout above 1.3595 would open 1.3648–1.3745, but without aggressive Fed signaling, sellers may use the rallies to unload. This makes GBP/USD a Buy on dips toward 1.3500 with tight risk, but not a clear long-term breakout until Powell commits to a more forceful cutting path.

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