GBP/USD Price Holds 1.37 Before GDP as Fed Bets Soften Dollar, BoE Stays Cautious
The British Pound is holding firm near 1.3720 in early Monday trade, as traders await the UK’s Q1 GDP release. GBP/USD has gained modest...
Quick overview
- The British Pound is stable around 1.3720 as traders await the UK’s Q1 GDP release.
- GBP/USD has gained due to a weakening U.S. dollar and expectations of a Federal Reserve rate cut by September.
- The Bank of England's cautious stance on rate cuts, amid persistent UK inflation, supports the Pound against the Dollar.
- Technical indicators suggest a bearish bias for GBP/USD, with key levels to watch at 1.3672 for potential breakdown.
The British Pound is holding firm near 1.3720 in early Monday trade, as traders await the UK’s Q1 GDP release. GBP/USD has gained modest ground on the back of a weakening U.S. dollar, with markets increasingly pricing in a Federal Reserve rate cut by September.
The pressure on the greenback follows a series of soft economic prints out of the U.S. May’s personal spending dipped 0.1%, and personal income contracted 0.4%—marking the steepest drop since 2021. Traders are now eyeing Friday’s Nonfarm Payrolls report, where expectations are dialed down to just 110,000 new jobs and a slight rise in unemployment to 4.3%.
As a result, the Dollar Index (DXY) slipped 0.35%, now hovering around the 97.00 mark. According to CME’s FedWatch Tool, odds for a September rate cut have surged—helping lift GBP/USD even as broader risk sentiment remains cautious.
Sterling Supported by Inflation Stickiness and BoE Caution
The Pound remains well-supported by the Bank of England’s cautious policy stance. Unlike the Fed, the BoE is in no rush to pivot toward rate cuts. UK core inflation has remained stubbornly high, giving policymakers little room to ease without risking further price instability.
This divergence is now front and center for currency traders. While the Fed may begin easing as soon as Q3, the BoE could hold steady for longer—giving Sterling a relative yield edge.
In my experience, such central bank divergence often creates favorable conditions for currency pairs like GBP/USD, especially when inflation remains a domestic issue for one side but softens for the other.
Technical Setup: Watch 1.3672 for Breakdown Risk
On the 2-hour chart, GBP/USD has slipped below a rising trendline that had supported the pair through much of June. The breakdown was confirmed by a bearish engulfing candle and a MACD crossover into negative territory—both early signs that bullish momentum is losing steam.
Key Levels to Watch:
- Support: 1.3682 → 1.3672 → 1.3639
- Resistance: 1.3730 → 1.3768 → 1.3803
- Bias: Bearish while below 1.3730
If GBP/USD fails to hold 1.3672, the next leg could target 1.3639 or lower. On the flip side, a clean reclaim of 1.3730 would neutralize the short-term bearish bias and open the path back toward 1.3768.
GBP/USD Price Outlook
With U.S. data weakening and the BoE signaling caution, GBP/USD is navigating a narrow range near 1.37. Short-term sentiment leans bearish below 1.3730, but upcoming UK GDP and U.S. payrolls could shift momentum quickly. For now, Sterling holds its ground—supported by divergence and inflation resilience.
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