Currency pairs forecast: GBPUSD

Trend bias:

Mild upside bias, but still range-bound. USD weakness post-Powell underpins the pair, though upside capped by stretched positioning.

Factors in price action:‍

Last week’s UK CPI overshoot firmed GBP, with markets scaling back rate cut expectations. Meanwhile, Powell’s Jackson Hole tone reinforced market conviction in a Fed September cut.

This week:

• US: Core PCE (Fri) the highlight, could revive dollar strength if it surprises to the upside

Key risks:

• Stronger US data (PCE, jobless claims) could reignite USD demand.

Trend Bias:‍

Mild upside potential, but rangebound trade likely until key UK and US data.

Factors in Price Action:

‍Sterling remains supported by expectations that BOE will tread cautiously on further cuts. Momentum is capped as the USD still benefits from safe-haven demand and Fed-watch dynamics.

This Week:

• UK: CPI (Wed), Flash PMIs (Thu), Retail Sales (Fri) — pivotal for BOE rate outlook.
• US: FOMC minutes (Wed), jobless claims & PMIs (Thu), Powell at Jackson Hole (Fri).

Key Risks Ahead:

• GBP: Hot CPI or stronger retail sales could delay BOE easing and lift GBP.
• USD: Hawkish Powell or firmer US data may put GBP/USD back under pressure.

Trend bias:

GBPEUR remains rangebound, but the balance of risks is tilted to the downside for sterling.

Factors in price action:

Last week’s UK GDP beat gave the pound a short-term lift, but the bigger picture still points to a stagnating economy, cautious consumer sentiment, and uncertainty ahead of the autumn budget — all of which could limit upside potential.

On the euro side, positioning remains constructive, with EUR still the preferred vehicle for USD bearish bets. While eurozone data has been mixed, steady ECB guidance is providing a stable backdrop. GBPEUR has bounced around 2% from year-to-date lows following the BoE’s ‘hawkish cut’ and market repricing of UK rate expectations, but fundamental headwinds for GBP remain.

‍This week:

• UK data calendar is light; sterling will take cues from broader risk sentiment.
• Eurozone flash PMIs on Thursday are the key macro driver — softer numbers could weigh on EUR, but the bar for disappointment is relatively high.