GBP/USD began the week with a cautious tone, halting a three-day win streak as investors reconsidered the possibility of a September rate cut from the US Federal Reserve. Fedspeak dominated market focus as Fed Chairman Jerome Powell and San Francisco Fed President Mary Daly both reiterated a lack of forward guidance on rate cuts, with decisions being made on a meeting-by-meeting basis.
The CME’s FedWatch Tool shows that rate markets are fully pricing in a September rate trim, with 100% odds of at least a 25 basis point decline in the fed funds rate. US Retail Sales data on Tuesday is expected to show a cooling in US activity, forecasted to stay flat at 0.0% MoM in June. Wednesday will bring the UK Consumer Price Index (CPI) inflation data, with MoM headline CPI inflation expected to decrease to 0.1% from 0.3% in June.
GBP/USD technical outlook shows a break in the bullish momentum on Monday, as the pair pulled back just shy of the 1.3000 key price level. The Pound Sterling, the oldest currency in the world, is the official currency of the United Kingdom and accounts for 12% of all FX transactions globally. Influenced by monetary policy decisions from the Bank of England, the GBP’s value is also impacted by economic indicators such as GDP, Manufacturing and Services PMIs, and Trade Balance data.
Data releases such as the Trade Balance measure the health of the UK economy and can influence the direction of the Pound Sterling. A positive Trade Balance, where a country earns more from exports than it spends on imports, strengthens the currency. On the other hand, weak economic data can cause the Pound Sterling to fall. Overall, the GBP’s value is determined by a combination of monetary policy decisions, economic indicators, and trade balances, all of which play a role in shaping the currency’s performance in the forex market.
