Currency pairs forecast: GBPUSD

Factors in price action:

• GBP remained under pressure early in the week as BoE’s Alan Taylor highlighted economic fragility and cautioned against overreacting to energy shocks, reinforcing stagflation concerns. Political and energy risks continued to weigh on sterling.
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• USD rallied strongly on renewed Iran tensions, surging oil prices, and upside US ISM data (manufacturing and services), with safe-haven flows supporting the greenback.

This week (Thu–Fri preview):

• UK: No major UK releases; markets remain sensitive to political and energy headlines.
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• US: Continuing claims, initial jobless claims, import prices (Thu); nonfarm payrolls, unemployment, retail sales, and manufacturing payrolls (Fri) — key drivers for USD direction.

Key risks ahead:

• Strong US payrolls or retail data → USD firm → GBPUSD lower.
• Energy or geopolitical developments → volatility in both GBP and USD.
• GBP remains sensitive to political headlines and BoE commentary.

Factors in price action:

• USD firmed through the week amid geopolitical risk, rising oil prices, and stronger-than-expected US data (durable goods, industrial production, jobless claims, Philadelphia Fed survey). Gains faded into Friday after the Supreme Court struck down Trump’s tariff regime, reducing a major US policy overhang.

• GBP softened early on weak CPI and dovish BoE commentary but stabilised later with stronger UK PMIs and moderate easing expectations. Political risk from the Gorton and Denton by-elections capped GBP gains.

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This week (2–6 Mar):

• UK: Political risk remains central after by-election results; domestic PMIs provide insight into activity, but headline drivers are political and BoE commentary.

• US: February nonfarm payrolls, unemployment, and retail sales — focus on confirming Fed inflation expectations and labour market resilience.

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Key risks ahead:

• Softer UK political or economic data → GBP pressured vs USD

• Strong US labour or retail data → USD firm → GBPUSD lower.

• Geopolitical risk or risk-off sentiment → USD safe-haven flows → GBPUSD capped.

Factors in price action:‍

• GBP remained sensitive to dovish BoE signals, ongoing political risk around Gorton & Denton by-elections, and lingering market caution from recent CPI and labour data.

• USD retains structural support after last week’s strong US activity and elevated geopolitical risks, though tariffs uncertainty continues to weigh on sentiment.

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This week (23–27 Feb):‍

• UK: Political risk around Gorton & Denton by-elections; potential fiscal slippage could impact GBP.

• US: Durable goods, factory orders, consumer confidence, regional Fed surveys, weekly jobless claims, and Friday PPI — key for Fed guidance and USD direction.

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Key risks ahead:‍

• Softer UK political/fiscal news → GBP under pressure.

• Strong US releases → USD firm → GBPUSD lower.

• Technical support levels from early 2026 could amplify moves if broken.

Factors in price action:

• GBP softened as BoE commentary highlighted a “sluggish” economy, fueling expectations of an early rate cut. Weak UK jobs and CPI prospects reinforced the dovish case.

• USD rallied on risk-off sentiment, strong US durable goods, housing, and industrial data, reversing early losses and supporting safe-haven flows.

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This week (Thu–Fri preview):

• UK: Retail sales (Ex/Inc Auto Fuel) and S&P Global PMIs — softer readings could reinforce BoE easing expectations.

• US: Core PCE, 4Q GDP, Personal Spending/Income, and S&P Global PMIs — key for Fed guidance and USD direction.

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Key risks ahead:

• Softer UK data → GBP further pressured.

• Strong US economic releases → USD firm → GBPUSD lower.

• GBPUSD trading near the November uptrend support area

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Factors in price action (Mon–Wed):

‍• GBP: Cabinet unity behind PM Keir Starmer trimmed the political risk premium, giving GBP some relief on Monday. Gains were modest as markets await Q4 GDP and ongoing labour-market signals.
• USD: Fell for three consecutive sessions through Tuesday amid disappointing December retail sales and weaker-than-expected payroll guidance, then rebounded Wednesday after an unexpectedly strong January nonfarm payrolls report (+130k) and a lower unemployment rate, pushing the market to price Fed cuts later (June → July).
• Treasury yields followed a similar pattern: lower early in the week, rising post-payrolls, providing USD support.

This week (Thu–Fri preview):

‍• UK: Q4 GDP (Thu) — expected soft end to 2025, with early 2026 recovery possible as budget uncertainty fades. Key risk remains a fragile job market and political headlines.
• US: Jan CPI (Fri) — main focus for Fed guidance; will set near-term USD tone.
• Eurozone: Trade data (Fri) — ongoing impact of US tariffs and Chinese shipment diversion could influence broader risk sentiment.

Key risks ahead:

‍• UK GDP weaker than expected → GBP downside pressure.
• Strong US CPI → USD supported → GBPUSD lower.
• Continued political stability → limits GBP downside, allows temporary rallies.
• Eurozone trade surprises → indirect risk-on/off influence via EURUSD moves.

Underlying trend:

‍Soft — GBP remains under pressure from political uncertainty and dovish BoE messaging, while USD gains from resilient US activity and higher yields.

Factors in price action:

‍• Last week, USD firmed after the ISM manufacturing upside surprise, strong ADP, and higher US yields.
• GBP fell sharply after the BoE’s 5–4 hold vote, dovish forecasts, and heightened political uncertainty following the Mandelson controversy and looming elections.
• Options markets signal strong positioning against GBP, particularly vs USD.

This week (9–13 Feb):

‍• UK: Q4 GDP release expected to show a soft end to 2025; early 2026 may see modest recovery as budget uncertainty fades.
• US: Wed: Jan Jobs Report (delayed) — nonfarm payrolls ~70k, unemployment ~4.4%.  Fri: Jan CPI — key gauge for Fed guidance.
• Risk tone also influenced by UK political headlines and broader market positioning.

Key risks ahead:

‍• Weaker-than-expected UK GDP → reinforces GBP downside → GBPUSD lower.
• Political uncertainty → GBP underperformance.
• Strong US payrolls or sticky CPI → USD firm → GBPUSD lower.

Underlying trend:

‍Neutral-to-slightly softer — USD has stabilised after an aggressive selloff, while GBP upside looks capped ahead of BoE risk.

Factors in price action:

‍• USD sold off sharply early last week on trade tensions, US political risk, shutdown fears and renewed FX intervention speculation involving Japan, pushing USD index to multi-year lows.
• JPY strength led the move, dragging USD/JPY sharply lower and lifting EURUSD and GBPUSD to multi-year highs.
• The latter half of the week saw a corrective USD rebound, driven by position unwinds, month-end flows, firmer US PPI and a hawkish signal from Trump’s nomination of Kevin Warsh as Fed Chair.
• GBP benefited from broad USD weakness but faded late week as USD stabilised and rates repriced modestly higher.

This week (2–6 Feb):‍

• UK:‍

– BoE policy decision: rates expected unchanged at 3.75% with a split vote.
– Updated forecasts likely show inflation nearing target by mid-2026, but a cooling jobs market argues for caution.

• US:

‍– December JOLTS openings expected to rebound modestly, but hiring signals remain mixed.
– Jan nonfarm payrolls: growth seen around 65k, unemployment rate holding at 4.4%.
– ISM manufacturing may tick up but still points to contraction and easing price pressures.

Key risks ahead:‍

• Dovish BoE tone or split vote leaning softer → GBPUSD lower.
• Weak US payrolls / soft labour signals → USD selling resumes → GBPUSD supported.
• Further USD stabilisation on rates repricing → caps GBP upside.

Underlying trend:‍

Mixed — GBP fundamentals improve and USD influenced by geopolitics

Factors in price action:

‍• Improved data from the UK saw hawkish repricing on rate expectations supporting GBP further.
• USD has weakened broadly amid speculation the US may coordinate with Japan on FX intervention to support JPY, dragging USD to its lowest level since September.

This week (26–30 Jan):

‍• UK: Quiet calendar; focus remains on growth narrative and BoE expectations.
• US: Fed meeting the highlight with rate expected to be unchanged

Key risks ahead:

‍• Stabilisation in USD/JPY or pushback on intervention talk → USD rebounds → GBPUSD lower.
• Continued FX-intervention speculation + weak US data → USD softness persists → GBPUSD supported.
• Escalation in trade or geopolitical risk → volatility rises, GBP likely underperforms defensively.

Underlying trend:‍

Soft — GBP remains on the back foot amid weak domestic momentum and elevated global political risk.

Factors in price action:‍

• UK growth concerns persist, keeping markets biased toward further BoE easing later in the year.
• GBP struggles to attract inflows as fiscal and demand uncertainty linger.
• USD supported by safe-haven demand following renewed Trump tariff threats on the EU linked to Greenland, adding to geopolitical risk premia.
• Markets remain sensitive to rates volatility and global trade tensions

This week (19–23 Jan):

‍• UK: Job market data (Tue) and inflation (Wed) all in focus this week and whether we see more dovish pricing on BoE rates
• US: Core PCE inflation numbers (Thur) expected to show firm but easing inflation – may not more the needle too much
• Trade rhetoric and political headlines remain an ongoing volatility risk.

Key risks ahead:‍

• Weak UK job and inflation data → reinforces easing bias → GBPUSD lower.
• Escalation in trade tensions → USD safe-haven bid → GBP underperforms.
• Dovish Fed rhetoric or softer US data → USD eases → GBPUSD stabilises.

Underlying trend:‍

Rangebound — Both currencies struggle to find clear direction.

Factors in price action:‍

• UK growth momentum remains fragile, keeping the BoE firmly biased toward further easing later this year.
• USD direction dominated by US inflation data, which will shape how aggressively markets price further Fed cuts.
• USD demanded clouded by “Sell America” theme returning.

This week (12–16 Jan):

‍• UK: Monthly GDP and industrial production for November; growth expected to remain subdued.
• US: December CPI is the main event — markets focused on services inflation and shelter components.
• Fed speakers throughout the week provide colour but unlikely to materially shift guidance.

Key risks ahead:

‍• US CPI downside surprise → USD softens → GBPUSD stabilises or lifts.
• Sticky US services inflation → USD firmer → GBPUSD lower.
• Weak UK GDP reinforces easing narrative → GBP underperforms.

Trend bias:‍

Cautiously soft — GBP starts the year on the back foot as growth concerns linger and USD sets the early-January tone.

Factors in price action:

‍• Early-year positioning and USD buying driving near-term moves.
• UK macro momentum remains weak, with the job market and demand outlook still fragile.
• Markets remain sensitive to Fed expectations after December cut, with job conditions still the key driver.
• Thin liquidity exaggerates moves early in the week.

This week (5–9 Jan):

‍• UK: UK service PMI to gauge growth momentum.
• US: ISM services and December job numbers towards the end of the week will set the tone for USD. Fed speakers return, though unlikely to materially shift near-term pricing.

Key risks ahead:

‍• Strong US payrolls or steady unemployment → USD firmer → GBPUSD lower.
• Softer job data → USD pullback → GBPUSD stabilises.
• Any renewed UK growth concerns → GBP should perform well.

‍Trend bias:

‍Downside bias — GBP vulnerable into a likely BoE cut, while USD direction hinges on job data.

Factors in price action:

‍• UK job data and CPI will shape expectations into Thursday’s BoE meeting, where a 25 bp cut is expected.
• Softer wages and employment are anticipated, reinforcing the easing bias.
• USD direction dominated by the November jobs report, with the unemployment rate the key market driver.
• Fed focus remains squarely on job conditions rather than inflation.

This week:

‍• Tue: UK job market data (wages/employment);; US nonfarm payrolls (Nov).
• Wed: UK CPI; multiple Fed speakers.
• Thu: BoE rate decision (25 bp cut expected); US jobless claims and US CPI
• Fri: UK public finances, retail sales, consumer confidence; US existing home sales.

Key risks ahead:

‍• Softer UK job data → reinforces BoE cut → GBPUSD lower.
• UK CPI upside surprise → challenges easing expectations → GBP short-cover.
• Weak US payrolls / higher unemployment → USD softens → GBPUSD stabilises.
• Strong job resilience in the US → USD firmer → GBPUSD pressured.

Trend bias:

‍Soft-to-choppy — GBP still lagging on weak domestic momentum, while USD trades event-heavy into the 10 December FOMC.

Factors in price action:‍

• Markets focused in on what the Fed policy will be in a post Powell Federal Reserve, with likely successor to be a dove, causing a broad weaker USD
• GBP was boosted after services PMI’s were revised higher for Novembers final numbers

This week:

UK

• UK Jobs Report (REC/KPMG): labour market still weak; hiring intentions in focus.
• Monthly GDP (Oct) expected +0.1%; consumption trends still soft.
• Bailey + multiple BoE MPC appearances; Reeves questioned by Parliament..

US:

• ‍‍FOMC (Dec 10): expected 25 bp cut but Powell likely keeps January as a live meeting.
• Weekly jobless claims (Thu) remain important for trend confirmation.

Key risks ahead:

• Hawkish Powell guidance → GBPUSD lower.
• Another soft UK labour print → adds downside for GBP.
• Softer US labour and a dovish Fed → supports GBPUSD rebound.

Trend bias:

‍GBP Rally To be Faded

Factors in price action:‍

• Fed leaning toward a 25 bp cut on 10 Dec, with last week’s weak Beige Book labour signals doing the heavy lifting.
• Possible appointment of Kevin Hassett as next Fed Chair emboldened dovish pricing on Fed rates

• GBP goes through relief rally with the Autumn Budget taken in the markest stride and bond markets being appeased.

This week (1–5 Dec):

‍• US: ISM manufacturing & services (mixed expected), ADP, jobless claims.
• Data remains outdated → limited impact on Fed expectations.
• UK: Light calendar; GBP follows USD and global sentiment.

Key risks ahead:

‍• Firmer ISM or cleaner US data → USD firmer, GBPUSD lower.
• Fed-cut expectations build → softer USD, GBPUSD stabilises.
• Risk-off environment favours USD → GBPUSD pressured.

Trend bias:

‍Downside tilt — GBP still feels heavy with fiscal uncertainty and soft domestic demand keeping rallies shallow.

Factors in price action:

‍• UK fiscal credibility remains the central theme as markets wait for clarity ahead of the Autumn Statement.
• GBP continues to underperform on weak demand indicators and cautious BoE communication.
• USD remains the global driver this week, with delayed US macro data feeding volatility and month-end positioning.

This week (24–28 Nov):

‍• Budget focus: Chancellor Rachel Reeves faces a major credibility test — with income-tax hikes reportedly ruled out, reliance on smaller revenue measures may not fully reassure markets.
• US: Ongoing delayed data releases: September retail sales, PPI, November ADP, Conference Board confidence, and jobless claims.
• US Markets closed Thursday for Thanksgiving.

Key risks ahead:‍

• Lack of convincing fiscal measures from Reeves → GBP remains pressured..
• Strong firmer delayed US data → USD re-strengthens, GBPUSD lower.

Our view:

‍GBPUSD trades vulnerable going into budget backdrop and the fallout will likely determine future direction of the pair

Trend bias:‍

Downside bias still intact — GBP rallies remain shallow with macro data and fiscal uncertainty weighing.

Factors in price action:‍

• GBP remains weak after soft UK labour and GDP data last week.
• UK Budget uncertainty is adding an extra layer of caution — markets are wary the Autumn Statement may underline weak fiscal space and sluggish growth.
• USD strength since September keeps GBPUSD sensitive to any pickup in dollar volatility this week.

This week:‍

• UK headline CPI (Oct) expected to slow — confirming inflation has peaked, though the descent may be slower than the BoE hopes.
• UK Flash PMI offers the first look at Q4 momentum.
• US: Nonfarm payrolls released Thu 20 Nov — despite being backward-looking, still a major volatility risk.
• Fiscal noise will continue ahead of the UK Autumn Statement.

Key risks ahead:‍

• A soft UK CPI print + weak PMIs + fiscal uncertainty = a bearish GBP cocktail.
• Heightened UK Budget speculation could weigh further if spending plans or growth forecasts disappoint.
• NFP downside surprise could trigger USD selling and give GBPUSD some relief.
• A strong jobs report risks reigniting USD strength and sending GBPUSD lower.

Our view:‍

GBPUSD trades vulnerable into UK CPI and the budget backdrop. NFPs are the swing factor — unless US data triggers USD selling, the pair risks grinding lower.

Trend bias:

Downside tilt remains — sterling vulnerable into event risk, but short-covering is possible if prints surprise to the upside.

Factors in price action:‍

GBP was weak going into last week’s BoE meeting on speculation that there could have been a surprise rate cut. No rate cut meant that markets covered their GBP shorts and we saw a rebound on the paid but nonetheless the pair remains in its September downtrend.

This week:

• GBP: Job numbers and then 3^rd quarter growth numbers will be the focus this week as we gauge how the economy is doing. Soft numbers will likely add pressure back on GBP as well as continue to mount pressure on Chancellor Rachel Reeves ahead of her budget on November 26^th
• USD: Waiting to see if US government shutdown is going to end which could then allow for key CPI and job data

Key risks / scenarios:

• Unless we get the release of any US data this week then the UK data points will take precedence. Solid job numbers and growth numbers and the rebound for GBP will likely continue within its 2 month downtrend. Also should the government shutdown end, then a rise in risk appetite could also lift the pair

Trend bias:‍

Still tilted lower — GBP remains under pressure unless there’s a clear positive catalyst. USD holds up given safe-haven flows and policy uncertainty.

‍Factors in price action:

• GBP declined with inflationary pressures easing raising the odds of a rate cut in December as well as the OBR downgrading productivity forecasts for the UK.
• USD firmed up following hawkish rate cut last week which eased the number of rate cuts expected by the Fed over the next 12 months.

This week (3–7 Nov):

• The Bank of England will be in focus on Thursday with the latest interest rate decision as well as their Monetary Policy which will include updated growth/inflation forecasts for the UK. The BoE are not currently expected to cut rates this month, however, there has been calls from Goldman Sachs and Barclays that the BoE could well cut in this meeting. In light of the upcoming budget and recent CPI numbers, there is a good possibility that this meeting could be seen as dovish

Key risks ahead:

• If the BoE signals more dovishness, GBPUSD could drop further with no clear support on the pair until the lows in April
• Conversely, if BoE holds firm (less dovish than expected) and risk sentiment improves, GBPUSD may rally but likely capped given underlying UK headwinds and the upcoming Budget

Trend bias:‍

Still skewed to the downside — sterling faces headwinds leading into the Autumn budget . A break below key support could open up further losses.

Factors in price action:‍

• Lower than expected CPI numbers added to rate cut bets from the BoE putting pressure on GBP
• USD demand in general picking up as markets ease the number of rate cuts over the next 12 months

This week (27–31 Oct):‍

• UK: With limited UK macro prints this week, GBP moves may be more sensitive to broad FX flows and external shock.

• US: Fed expected to cut rates by 25 bps on Wednesday which is fully priced in by markets. Language for future policy will be in focus as well GDP numbers at the end of the week

Key risks ahead:‍

• A strong USD surprise from hawkish Fed comments might drag GBPUSD lower to test the October lows

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Trend bias:‍

Bearish bias persists — GBP continues to struggle under domestic pressures, and USD may regain footing if risk aversion picks up.

Factors in price action:

‍• The spotlight this week shifts to UK inflation (CPI) — a hotter-than-expected print could offer GBP some relief, but a soft one would deepen downside.
• With the US still largely data-quiet (due to shutdown constraints), USD moves will be more about global sentiment, positioning, and capital flows than fresh macro surprises.
• Political and fiscal (UK) noise also matters — talk around energy VAT cuts or government measures could add surprises.

This week (20-24 Oct):

‍• UK: The key event is CPI inflation on Wednesday 22 Oct. Markets will closely watch both headline and core prints, plus the breakdown by services, energy, etc.
• Also, fiscal data (government receipts, borrowing) and retail / flash PMI data toward the end of the week may feed GBP moves.
• Global / Other: Flash PMIs across major economies on Friday will be in focus (incl. UK, Eurozone, US) to gauge global activity momentum.
• September’s long awaited US CPI numbers are due on Friday.

Key risks ahead:

‍• A hot UK CPI or surprises in core inflation could give GBP a bounce, especially if it reshapes rate expectations.
• A weak inflation print (or signs of disinflation) would reinforce dovish expectations for the BoE and intensify GBP pressure.
• A USD resurgence on hot CPI would magnify GBPUSD downside.
• Unexpected fiscal announcements (energy VAT, stimulus) or data revisions might cause intraday shocks.

Trend bias:‍

Bearish bias remains intact — rally attempts have been capped, and the September low / support zone breached last week.

Factors in price action:‍

• Sterling remains under pressure amid weak UK fundamentals and political uncertainty.
• USD strength is bolstered by safe-haven flows amid global political noise (France PM resignation, Japan LDP twist) and diverging Fed expectations

This week (13–17 Oct):

• ‍UK: The spotlight falls on the labour/employment report for September (jobs, wage growth) — a key input into BOE rate expectations.
• ‍US: Very light on data this week — USD moves likely driven by external risk flows rather than fresh macro prints.

Key risks ahead:

• ‍‍Strong wage growth or tight labour market data would push back against GBP weakness, possibly triggering a relief bounce toward resistance.
  Weak jobs numbers or indications of labour softening may accelerate downside pressure, with GBPUSD potentially revisiting the August and May low
• Any global risk event or geopolitical development that favours the USD could exacerbate sterling weakness.
• USD strength is bolstered by safe-haven flows amid global political noise (France PM resignation, Japan LDP twist) and diverging Fed expectations

Trend bias:‍

Consolidating following breakdown of the Aug – Sep uptrend.

Factors in price action:‍

Investor sentiment remains cautious amid ongoing concerns in the UK economy, with the service sector's growth hitting a five-month low in September. Additionally, the U.S. government shutdown has led to a delay in key economic data releases, contributing to market uncertainty resulting in USD weakness

This week:

• US: Fed minutes.

Key risks ahead:

• Delays in U.S. economic data releases may prolong market uncertainty and volatility.

Trend bias:‍

August  downtrend still intact but support found on the August/July lows

Factors in price action:

‍Market sentiment on the UK remains negative with continued concerns of the UK economy which was illustrated by the worse than expected PMI numbers versus better than expected PMI numbers from Europe

This week:

• UK: Labour party conference.
• Eurozone: EU CPI

Key risks ahead:

• Markets will be listening out for any hints from Chancellor Rachel Reeves of what could be released in the Autumn budget.
• Given markets are firmly pricing in no more rate cuts by the ECB – sharp fall in CPI could spur on rate cut bets and weaken EUR

Trend bias:‍

Overall range-bound as markets weigh UK inflation surprises against weak domestic demand in the UK. US rate cut story all played out?‍

Factors in price action:

• UK’s CPI came in hotter than expectation, tightening BOE rate-cut expectations.
• UK PSNB hit 5 year highs piling pressure on the Chancellor.
• USD fought back after Fed meeting suggesting perhaps have peaked pricing in Fed rate cuts

This week:

• UK: Composite/Services PMIs.
• US: GDP second estimate for Q2, Core PCE, and Fed officials speaking.

Key risks ahead:

• Strong US inflation or employment data → USD strength and could see September lows tested.
• If UK data surprises with strength, GBP could test prior resistance.

Trend bias:

Pair finished unchanged last week, continuing its rangebound trend

Factors in price action:‍

UK long term debt yields spiking to 1998 highs, drew concern for UK seeing initial selling on GBP but then countered by weak job numbers seeing weaker USD

This week:

• UK: GDP for July
• US: Inflation numbers in the form of PPI and CPI

Key risks ahead:

• With underlying concerns of UK economy still simmering in the background, a lower-than-expected growth number could put pressure on GBP. A weaker inflation number to add to the disappointing job numbers last week could pile further pressure on USD as well.

Trend bias:‍

Sideways, consolidating within a tight range.

Factors in price action:

• GBP on the backfoot on continued concerns about brewing stagflation in the economy as well as fiscal concerns that could arise in the upcoming Autumn Budget
• USD undermined by rate cut expectations – more expected by the Fed than by the BoE this year.

This week:

• All about US job numbers this week culminating in the nonfarm payroll print and unemployment rate on Friday

Key risks ahead:

• Strong US job numbers should ease off rate cut expectations following last months lower revisions as well as boosting sentiment about the US economy. If so GBPUSD should trade towards the lower end of its trading range. A disappointment and a test of the July and August highs seems likely

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.