GBP/USD is currently positioned at 1.3627 on Tuesday. In the concluding complete week of August, the pair persists close to its peak level since the middle of February. Sterling is experiencing support due to the weakness of the dollar, a consequence of the US Treasury’s surprising move to at least double its purchases of long-term government bonds. Investors are anticipating further information regarding the impending sanctions on Iran. The highlight of the week will be Fed Chair Kevin Warsh’s speech at Jackson Hole on Friday, which could influence expectations for the future trajectory of US interest rates. In the UK, money markets persist in pricing in one rate hike from the Bank of England before the end of the year, along with an additional 25-basis-point adjustment anticipated by early 2027.
July inflation accelerated to 2.9% – the highest since March – while core inflation exceeded expectations at 2.6%. Further support for the pound is evident from robust domestic data: PMIs indicate an increase in business activity, while consumer confidence rose to a two-year high in August. Simultaneously, persistent inflation continues to pose a significant risk, possibly exacerbated by an extended conflict with Iran and sustained high energy prices. On the H4 GBP/USD chart, the market is approaching the local upside target at 1.3672 and is establishing a narrow consolidation range beneath this level, currently fluctuating between 1.3619 and 1.3650. A new compact consolidation range is anticipated to develop beneath 1.3672. A downside breakout would pave the way for a decline toward 1.3550.
The MACD indicator aligns with this scenario, as its signal line is positioned above zero and is starting to trend downwards. On the H1 chart, the market has established a tight consolidation range centred around the 1.3640 level, currently spanning from 1.3618 to 1.3650. A move lower toward 1.3600 is anticipated, and a breach beneath this level would pave the way for an additional decline to 1.3550. The Stochastic oscillator corroborates this scenario, as its signal line is positioned below 50 and is trending downward toward 20, suggesting short-term downside pressure. GBP/USD remains close to multi-month highs, buoyed by dollar weakness in the wake of the US Treasury’s bond buyback announcement and robust UK economic data.
Markets are currently concentrating on forthcoming catalysts, such as the specifics of new sanctions against Iran and Fed Chair Warsh’s address at Jackson Hole on Friday, which may influence expectations regarding US interest rates. In the UK, money markets persist in pricing in additional tightening from the Bank of England, bolstered by rising inflation and positive indicators of business activity and consumer confidence. Nonetheless, elevated inflation and geopolitical uncertainties continue to be significant issues. Technically, the pair may experience a brief retracement toward 1.3600, and a breach beneath this threshold would pave the way toward 1.3550. The near-term direction will hinge on central bank signals and geopolitical developments.
