GBP/USD Price: Pound at 1.3435 Pressured Before Powell’s Jackson Hole
Sterling battles sticky inflation and weak growth as Powell’s Jackson Hole address sets direction between 1.3350 support and 1.3550 resistance | That's TradingNEWS
GBP/USD Extends Losses Ahead of Powell at Jackson Hole
The British pound is under steady pressure, with GBP/USD sliding to 1.3435 in Thursday’s European session after four straight days of declines. Earlier in Asia, the pair touched fresh weekly lows under 1.3450 before a modest bounce, but gains remain capped. Dollar strength remains dominant, driven by market caution ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.
Dollar Strength Supported by U.S. Data and Rate Bets
The U.S. Dollar Index (DXY) trades near 98.30, holding gains after July Producer Price Index data came in hotter than expected. This reduced bets on aggressive Fed easing, with odds of a September rate cut sliding to 83% from nearly 100% last week. Markets now price about 54 basis points of cuts by year-end, far less than previously anticipated. Caution across equities, with the Nasdaq losing over 240 points, has added to safe-haven flows into the greenback.
UK Inflation Stays Sticky While PMI Surprises to the Upside
Sterling briefly drew support from UK flash PMI rising to 53.0 in August, above July’s 51.5, led by services. Still, analysts caution that much of the inflation strength came from seasonal airfare prices rather than broad-based demand. The earlier July CPI report showed headline inflation rising to 3.8% from 3.6%, well above the BoE’s 2% target, while core CPI also climbed to 3.8%. With growth sluggish, the UK risks stagflation. Futures now imply less than a 50% chance of a BoE rate cut before end-2025, with March 2026 seen as the more likely timing.
Technical Breakdown Puts GBP/USD Bears in Control
Technically, the pair struggles after breaking below the psychological 1.3500 mark. It now trades between the 50-day EMA at 1.3485 and the 100-day EMA at 1.3463, showing indecision but leaning bearish. Resistance is firm at 1.3483, while initial support sits at 1.3397. A decisive break lower exposes 1.3343 and 1.3280, while recovery above 1.3550 is needed to re-open 1.3592 and 1.3650. The RSI at 41 reinforces bearish momentum.
Political Risk Adds to Market Fragility
Political noise in Washington has supported the dollar. Trump’s public call for Fed Governor Lisa Cook to resign has reignited debate over Fed independence, unsettling global markets. This comes just before Powell’s Jackson Hole address, raising the stakes for Friday. A hawkish tilt from Powell could reinforce dollar demand, while dovish remarks may offer GBP/USD a short-lived rebound.
Investor Positioning and Sterling’s Carry Trade Appeal
Despite near-term weakness, sterling remains one of the higher-yielding G10 currencies, maintaining some appeal for carry trades against the yen and euro. Analysts at UBS still project potential gains toward 1.39 by year-end if dollar momentum fades. For now, however, technical and macro signals point lower, with the July–August double-top at 1.3583 capping upside.
Final Assessment: Buy, Sell, or Hold GBP/USD?
Given sticky U.S. inflation, Powell’s imminent Jackson Hole speech, stagflation risks in the UK, and a bearish technical structure, the immediate risk favors further downside. Unless GBP/USD reclaims 1.3550, rallies should be sold with targets at 1.3350 and 1.3250. Near-term trade bias is Sell, with tight risk controls above 1.3585.
