FX.co ★ GBP/USD

Technical and Fundamental Analysis of the GBP/USD Pair GBP/USD edged higher on Monday after slipping modestly in the previous session, with the pair trading near 1.3520 as the U.S. dollar struggled to extend its recent strength. Sterling benefited from softer dollar momentum as traders turned their attention to this week’s U.S. inflation figures. A Goldman Sachs assessment has placed particular importance on the upcoming CPI data, with the investment bank expecting relatively moderate inflation readings that could encourage the Federal Reserve to keep policy unchanged. However, the unexpectedly strong August employment report has removed an important hurdle to another potential Fed rate increase. U.S. labor-market data delivered a significant upside surprise last week. Figures from the Bureau of Labor Statistics showed that Nonfarm Payrolls increased by 162,000 in August, far exceeding the consensus forecast of 56,000. July employment growth was also revised substantially higher, moving from the initially reported decline of 23,000 to an increase of 21,000. At the same time, the unemployment rate remained steady at 4.1%, reinforcing the view that the U.S. labor market continues to display considerable resilience despite broader economic uncertainty. The dollar’s current weakness may therefore prove temporary if incoming inflation data strengthens expectations for tighter Federal Reserve policy. Following the strong payroll figures, traders increased their expectations for a September rate hike. CME Group’s FedWatch Tool now indicates that the probability of a 25-basis-point increase is around 58.3%, compared with approximately 50.2% before the employment report. This shift has created an important upside risk for the dollar, particularly if the upcoming CPI figures show that price pressures remain persistent. For GBP/USD, the U.S. inflation release will consequently be one of the most important catalysts of the week. A softer-than-expected CPI reading could reinforce expectations that the Fed will remain on hold and potentially weaken the dollar further, giving sterling additional room to recover. Conversely, stronger inflation could revive expectations for another U.S. rate increase and place renewed pressure on GBP/USD. The market is therefore balancing strong labor-market conditions against the possibility of moderating inflation. In the United Kingdom, monetary-policy expectations remain supportive of the pound. Financial markets have largely priced in another Bank of England rate increase before the end of the year, while expectations also point toward another move by March 2027. Persistent inflation and concerns surrounding the sustainability of UK public finances remain key factors keeping investors focused on the possibility of additional monetary tightening, even as economic growth remains uneven. Recent communication from BoE policymakers has also provided sterling with additional support. Scotiabank analysts observed that the tone coming from Monetary Policy Committee members has become somewhat more hawkish, creating a more favorable backdrop for GBP. Technically, GBP/USD is trading around 1.3510 as the H4 chart develops a consolidation pattern following a recovery from the 1.3480–1.3490 area. The pair remains below recent highs around 1.3540–1.3555, leaving buyers needing a clear break above this region to regain stronger upside momentum. H4 demand is established between 1.3480 and 1.3505, based on previous swing lows and areas where buyers have successfully absorbed selling pressure. The rising 50-period SMA is positioned within this broader support structure and continues to provide dynamic downside protection. Meanwhile, the H4 20-period SMA sits higher around 1.3530–1.3540 and currently represents the first significant moving-average resistance. The H1 timeframe shows a tighter battle between buyers and sellers. Immediate demand can be found around 1.3495–1.3510, which corresponds with recent intraday bases and the current trading area. Above price, supply is concentrated around 1.3525–1.3540, reinforced by the H1 20 SMA, which has begun to slope slightly lower. The H1 50 SMA remains underneath price and offers secondary support, creating a relatively compressed technical structure ahead of the next directional move. Key support is initially positioned around 1.3490–1.3500, where H1 demand, the H4 50 SMA and the psychological round number converge. A deeper support layer sits around 1.3465–1.3480 if sellers manage to regain control. On the upside, resistance begins around 1.3530–1.3545, combining the H4 20 SMA with recent rejection highs, while the stronger supply zone extends from 1.3555 to 1.3570 near previous H4 swing peaks.