Key Moments
- GBP/USD has remained in a narrow consolidation around 1.3630 for a second consecutive day during Tuesday’s Asian session.
- Expectations for at least one additional Fed rate hike this year and heightened US-Iran tensions have supported the US Dollar and constrained gains in GBP/USD.
- Traders are awaiting the upcoming US PCE Price Index release and Fed Chair Kevin Warsh’s Jackson Hole speech for clearer policy signals.
Range-Bound Trading Persists in GBP/USD
The GBP/USD pair is extending its sideways trading pattern for a second straight session, holding near the 1.3630 level during Asian hours on Tuesday. The US Dollar is attempting to extend a modest rebound from its weakest level since May 14, creating resistance for further upside in the currency pair. At the same time, the absence of strong follow-through selling pressure is tempering conviction among bearish participants.
Fed Policy Expectations and Geopolitical Risks Support the Dollar
Softer US inflation readings for July have shifted market expectations toward a pause in rate changes at the September 15-16 FOMC meeting. Nonetheless, market participants continue to assign more than a 75% probability that the Federal Reserve will increase interest rates at least once before year-end, citing ongoing inflation risks linked to volatile crude oil prices. This backdrop, combined with geopolitical tensions, has provided a floor under the US Dollar and limited upside for GBP/USD.
Escalating frictions between the United States and Iran are also adding to safe-haven demand for the Greenback. Treasury Secretary Scott Bessent stated Monday that the United States is initiating a campaign to cut Iran off from the global economy and cautioned that countries engaging in commerce with Iran could be subject to US sanctions. In response to the economic pressure, Iran’s Supreme National Security Council secretary, Mohsen Rezaei, said that the country would halt all oil shipments through the Strait of Hormuz if the economic confrontation persists.
Focus Shifts to US PCE Data and Fed Communication
Despite the supportive fundamental backdrop, traders have been reluctant to build large long positions in the US Dollar, preferring to wait for additional clarity on the Fed’s policy trajectory. Market attention is therefore set to concentrate on the release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday, followed by Fed Chair Kevin Warsh’s keynote remarks at the annual Jackson Hole Symposium on Friday. These events are expected to shape expectations for interest rates and could act as fresh catalysts for GBP/USD price action.
Technical Outlook: Key Levels for GBP/USD
On the technical front, GBP/USD continues to exhibit a constructive short-term bias while it trades above the 200-day Simple Moving Average (SMA). A decisive move through the 1.3660-1.3665 supply region is viewed as necessary to confirm this positive outlook and support prospects for additional gains.
On the downside, the 200-day SMA, currently located at 1.3431, represents the main structural support zone. A sustained break below this area would erode the broader constructive tone and could pave the way for a more pronounced corrective decline.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Performance Against Major Currencies This Week
The table below outlines the percentage changes of the US Dollar relative to major currencies this week. Over this period, the US Dollar has shown the strongest advance against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.03% | 0.33% | 0.32% | 0.11% | 0.13% | 0.24% | |
| EUR | -0.15% | -0.13% | 0.09% | 0.16% | -0.04% | -0.02% | 0.09% | |
| GBP | -0.03% | 0.13% | 0.15% | 0.31% | 0.10% | 0.08% | 0.24% | |
| JPY | -0.33% | -0.09% | -0.15% | 0.04% | -0.14% | -0.11% | -0.02% | |
| CAD | -0.32% | -0.16% | -0.31% | -0.04% | -0.16% | -0.15% | -0.07% | |
| AUD | -0.11% | 0.04% | -0.10% | 0.14% | 0.16% | 0.01% | 0.13% | |
| NZD | -0.13% | 0.02% | -0.08% | 0.11% | 0.15% | -0.01% | 0.12% | |
| CHF | -0.24% | -0.09% | -0.24% | 0.02% | 0.07% | -0.13% | -0.12% |
The accompanying heat map framework indicates bilateral percentage changes, where the currency listed on the left serves as the base and the currency along the top is the quote. For example, selecting the US Dollar in the left-hand column and moving horizontally to the Japanese Yen cell shows the percentage change for USD (base)/JPY (quote).
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