GBP/USD Forecast: Pound Holds $1.35 as CPI Data and Fed Cuts Shape Outlook
The pound is trading in a tight range near $1.3540 during the European session as investors wait for several market moving events...
Quick overview
- The pound is trading around $1.3540 as investors await key meetings involving US and Ukrainian leaders.
- Market sentiment may be influenced by the outcome of the Trump-Zelenskyy talks, with potential implications for risk assets.
- UK inflation data is also in focus, with expectations of a 3.7% YoY core CPI, which could impact the Bank of England's policy stance.
- Technically, GBP/USD is consolidating within a rising channel, with key resistance at $1.3594 and support at $1.3485.
The pound is trading in a tight range near $1.3540 during the European session as investors wait for several market moving events. The focus is on Washington where US President Donald Trump, Ukrainian President Volodymyr Zelenskyy and NATO leaders will meet.
Last week Trump’s talks with Russia’s Vladimir Putin sparked speculation over possible peace terms including a freeze of current front lines. Zelenskyy rejected concessions and now the focus is on the White House talks. For markets even a neutral outcome could support risk appetite and S&P 500 futures are edging higher at 6,460 (+0.13%).
Signs of a truce could lift risk assets further and indirectly help the pound which has been supported by resilient market sentiment.
UK Inflation Data in Focus
Traders are also looking at July’s UK Consumer Price Index (CPI) which is expected to show core inflation at 3.7% YoY. Persistent price pressures may reinforce the Bank of England’s cautious stance after last week’s 25-basis-point rate cut to 4.25%.
Gilt yields are rising and the pound has limited exposure to global trade tensions. A stronger than expected CPI reading could support GBP/USD while softer inflation would strengthen the case for further BoE easing.
Key drivers this week:
- July UK CPI (expected 3.7% YoY, core)
- Trump–Zelenskyy–NATO meeting
- Jackson Hole Symposium (Aug 21–23)
GBP/USD Technical Outlook
The pound is consolidating near $1.3539 inside a rising channel that started in late July. Price is supported above the 50-period SMA at $1.3545 and the channel base at $1.3485.
Candlesticks show hesitation with a cluster of small-bodied candles near resistance at $1.3594 indicating market indecision. Momentum is fading: the RSI at 46 is below 50 and the MACD is tightening and could be about to cross bearishly.
- Bullish case: Above $1.3594 could extend to $1.3647–$1.3696.
- Bearish case: Below $1.3485 targets $1.3442 and $1.3398.
Trade: Wait for confirmation. Above $1.3594 long, below $1.3485 short.
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