Key Moments
- GBP/USD trades around 1.3500 during Tuesday’s Asian session, extending a two-day advance.
- Markets have scaled back expectations for a Bank of England rate hike by year-end, even as GBP outperforms peers.
- Investors are focused on upcoming US CPI and UK Q2/June GDP data, which are expected to guide policy expectations.
GBP Supported Despite Reduced BoE Hike Expectations
The British Pound is managing to preserve its recent gains against the US Dollar, with GBP/USD hovering close to 1.3500 during Asian trading on Tuesday. The pair remains underpinned, even as pricing in financial markets reflects diminished prospects of a near-term interest rate increase from the Bank of England.
Strategists at Rabobank highlight that “for the UK, the market is currently pricing in a reduced expectation of a rate hike by the end of the year.
Weekly Performance of Major Currencies vs British Pound
The British Pound has outpaced several major counterparts this week, with its strongest relative performance recorded against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | -0.18% | 0.89% | -0.14% | 0.08% | 0.12% | 0.29% | |
| EUR | -0.08% | -0.27% | 0.79% | -0.29% | -0.06% | -0.06% | 0.11% | |
| GBP | 0.18% | 0.27% | 1.01% | -0.03% | 0.21% | 0.23% | 0.36% | |
| JPY | -0.89% | -0.79% | -1.01% | -0.71% | -0.47% | -0.59% | -0.39% | |
| CAD | 0.14% | 0.29% | 0.03% | 0.71% | 0.25% | 0.12% | 0.47% | |
| AUD | -0.08% | 0.06% | -0.21% | 0.47% | -0.25% | 0.00% | 0.14% | |
| NZD | -0.12% | 0.06% | -0.23% | 0.59% | -0.12% | -0.00% | 0.15% | |
| CHF | -0.29% | -0.11% | -0.36% | 0.39% | -0.47% | -0.14% | -0.15% |
The matrix above details percentage moves of major currencies relative to each other this week. The base currency is indicated in the left-hand column and the quote currency in the top row. For instance, choosing the British Pound on the left and moving across to the US Dollar column gives the performance of GBP (base)/USD (quote).
UK GDP Data in Focus
For Sterling, the key domestic catalyst this week is the release of preliminary second-quarter and June Gross Domestic Product figures for the United Kingdom on Thursday. Consensus points to quarterly growth of 0.4% for the April-June period, compared with the prior 0.6% reading. On a month-over-month basis, GDP is projected to contract by 0.1%.
US Dollar Steady Ahead of July CPI
The US Dollar Index (DXY) is trading nearly unchanged, holding near 99.80 and consolidating Monday’s rebound. The gauge is anticipated to remain rangebound as market participants await the July US Consumer Price Index release on Wednesday.
US Inflation Outlook and Fed Implications
Brown Brothers Harriman’s Elias Haddad anticipates that the imminent US July CPI report will show inflation “firm modestly but stop short of signaling a renewed acceleration in inflation.” He adds that “headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June,” while “core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June.” According to Haddad, the figures should point to a continued, gradual moderation in underlying price pressures rather than a resurgence.
The outcome of the CPI release is poised to shape expectations for Federal Reserve policy, especially after the July policy statement flagged elevated concern about upside inflation risks. Recently, weaker US Nonfarm Payrolls data for July led traders to remove the prospect of an interest rate increase at the Fed’s September meeting.
GBP/USD Technical Setup
On the daily chart, GBP/USD is trading at 1.3500 and maintains a constructive short-term bias. Spot remains above the 60-day exponential moving average at 1.3403, while the previously descending resistance trend line, now acting as support, is situated around 1.3456. The 14-period Relative Strength Index stands at 61.1, indicating a positive backdrop with upside momentum not yet stretched into overbought territory.
Initial support is located near the former trend-line barrier turned support at 1.3456, followed by the 60-day EMA at 1.3403. A deeper decline into this zone would be expected to draw renewed buying interest. Provided these supports hold, the bias is likely to remain skewed upward, with buyers looking for progress above the recent 1.3509 close in the upcoming sessions.





