GBP/USD Forecast: Pound Near 1.35 as Fed Cut Odds and UK Data Shape Outlook

GBP/USD Rises on Weak U.S. Jobs Data

The GBP/USD pair reclaimed ground above 1.35 after U.S. labor market numbers showed only 22,000 new jobs in August, far below expectations of 75,000. The unemployment rate rose to 4.3%, its highest since 2021, while wage growth held at 0.3% month-on-month. Treasury yields fell sharply, the dollar weakened, and traders shifted almost fully toward pricing in a Federal Reserve rate cut on September 17. Some are now betting on as many as three cuts before year-end, contingent on softer inflation data. The CPI release on September 11 and PPI a day earlier will be pivotal, alongside UoM sentiment on September 12, as they set the backdrop for the Fed’s decision.

UK Data Provides Sterling with Tailwind

Recent UK figures gave the pound resilience. July retail sales rose 0.6% month-on-month, beating forecasts of 0.3%. Net lending to individuals jumped £6.1 billion compared with £4.9 billion expected, while final services PMI hit 54.2, above the preliminary 53.6. These numbers reinforced the case for a consumer-driven rebound, though traders remain cautious amid fiscal uncertainty. Political reshuffling under Prime Minister Starmer and questions over fiscal discipline continue to hang over sentiment, with Deputy PM Raynor’s resignation raising expectations of Treasury changes.

Technical Outlook for GBP/USD Levels

The GBP/USD chart shows a bullish structure, with price advancing to 1.3506 and reclaiming both the 50-day SMA at 1.3446 and the 200-day SMA at 1.3464. Resistance is clustered between 1.3540 and 1.3588, followed by a major test at 1.3595–1.3600. A breakout above these thresholds could open the door to 1.3660. Support sits in the 1.3435–1.3460 zone, with a failure there exposing 1.3417 and possibly 1.3300. Momentum indicators, however, are flashing caution. RSI is at 64.9, approaching overbought territory, while candlesticks near 1.3550 show long upper wicks, a potential reversal sign. A bearish divergence is forming between price and RSI, suggesting risks of a pullback.

Macro Catalysts That Could Drive GBP/USD

The pound’s near-term path will depend on U.S. macro data. September’s CPI is expected at 0.3% month-on-month and 2.9% year-on-year. If inflation undershoots, Fed cuts are likely to accelerate, lifting GBP/USD toward 1.36 and beyond. Conversely, stronger prints would re-energize the dollar, pressuring the pair back toward 1.34. Political risk in the UK also cannot be ignored. Analysts at Capital Economics warned that fiscal missteps could trigger bond market stress, noting that historical fiscal crises in Britain often came from changes in perceptions or leadership rather than immediate data.

Positioning and Market Sentiment

CFTC data shows speculative net short positions on GBP widened slightly to –33,100 from –31,400 the prior week, indicating traders still doubt the sustainability of sterling gains. Yet the pair’s ability to close above 1.35 despite negative positioning highlights demand from real money accounts and hedging flows. Options markets are also pricing higher implied volatility into September, reflecting the binary risk of Fed cuts and UK fiscal headlines.

Verdict on GBP/USD

The balance of risks favors further upside in GBP/USD if U.S. inflation data supports the Fed’s dovish tilt. A sustained daily close above 1.3545 would strengthen the bullish case, while a rejection at resistance paired with strong U.S. data could quickly drag the pair back toward 1.3417. At 1.3506, the setup argues for a short-term buy bias with tight stops, but traders must be ready for sharp swings around U.S. data and UK political announcements.

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