GBP/USD Price Stabilizes at $1.3500 as Fed Easing Bets Weigh on Dollar
Sterling finds support above 1.3450 with upside targets at 1.3594 and 1.3788, while PCE inflation and Fed policy remain key drivers | That's TradingNEWS
GBP/USD Tests 1.3500 as Dollar Weakens Despite Robust U.S. Growth
The GBP/USD pair is holding around 1.3500, stabilizing after a volatile week in which it advanced three straight sessions before pausing on Friday. The Pound has risen nearly 2.8% from its four-month low of 1.3140, though it remains more than 2% below its July highs. Cable’s ability to stay above the nine-day EMA at 1.3488 reinforces the bullish short-term bias, while the 14-day RSI remains above 50, showing momentum is still on the upside.
U.S. Data Delivers Growth but Fails to Lift Dollar
The U.S. economy surprised markets with Q2 GDP revised up to 3.3%, well above the 3.1% forecast and a sharp rebound from the -0.5% contraction in Q1. Initial jobless claims also eased to 229K, showing resilience in the labor market. Ordinarily, such numbers would underpin the Greenback, but sentiment has shifted as traders expect the Federal Reserve to cut rates in September. The July PCE Price Index rose 0.2% month-on-month, with the core gauge up 0.3% and 2.9% year-on-year, its highest since February. Inflation pressures remain above target, but weakening payroll trends have tilted the Fed toward easing, keeping the Dollar Index pinned below 98.00.
Technical Levels Define the Range for GBP/USD
The short-term picture for GBP/USD remains constructive as long as it holds above 1.3450–1.3488. A breakout above the monthly high of 1.3594 would clear the path toward 1.3788, last seen in October 2021, with the upper channel boundary near 1.3840 as the next target. On the downside, a drop below the 50-day EMA at 1.3458 would expose the 1.3140 low from May. If selling accelerates through that floor, the market could unwind further to 1.3000.
Sterling’s Position Against Major Currencies
On the day, the British Pound has traded mixed across majors. It slipped 0.19% versus the AUD and 0.17% against the NZD, while showing marginal strength versus the CHF. Against the Dollar, the Pound is flat near 1.351, reflecting a battle between U.S. macro resilience and Fed dovish expectations.
Market Outlook for GBP/USD
With U.S. rate cut odds near 85% for September, Sterling’s upside is tied to whether the Fed confirms a dovish pivot. The absence of new U.K. economic catalysts leaves GBP/USD largely driven by global risk sentiment and U.S. policy expectations. If the Fed signals aggressive easing, GBP/USD could climb through 1.36 toward 1.38, while a firmer stance would send Cable back toward 1.34. Based on current data, the pair remains a Buy on dips above 1.3450, but positioning should stay tactical given headline risks from PCE, jobs, and Fed commentary.
