GBP/USD strengthens to approximately 1.3545 during the early Asian session on Tuesday. UK Chancellor John Healey has announced reforms aimed at enhancing investment and regulation within the UK. Traders are increasing their positions on a potential US interest rate hike in September, spurred by strong US employment figures. The GBP/USD pair advances to approximately 1.3545 on Tuesday. The British Pound edges higher against the US Dollar after UK Chancellor John Healey unveiled a series of measures designed to encourage economic growth and draw more private investment into the UK. Healey pledged to reduce regulatory obstacles to UK investment and establish new testing liberties for emerging technologies, according to the source. Additionally, the UK Chancellor on Monday announced plans to grant city regions enhanced authority to attract private investment, aligning with Prime Minister Andy Burnham’s initiative to decentralise power from the central government.
Healey also emphasised his dedication to maintaining fiscal discipline and addressing the increasing costs faced by businesses and the public, including a target of reducing regulatory costs by 25% by the next election in 2029. The Cable gains a measure of support in the wake of Healey’s inaugural significant address in anticipation of the forthcoming October budget. A stronger-than-anticipated US jobs report in August has elevated the likelihood of Federal Reserve rate hikes to over 60%. The US Nonfarm Payrolls added 162,000 jobs in August, surpassing expectations, while the Unemployment Rate remained unchanged during the same period, as reported by the US Bureau of Labour Statistics on Friday. Attention will turn to the upcoming US Producer Price Index and Consumer Price Index inflation readings later this week.
Strategists at Brown Brothers Harriman note that the upcoming UK July GDP release, due on Friday, is “unlikely to shift the dial on Bank of England rate expectations.” They point out that “real GDP is expected at 0.0% m/m vs. +0.3% in June, as July’s decline in retail sales volumes offset an improvement in the compositive PMI,” while “the BoE’s baseline Q3 forecast is 0.1% q/q.” In their view, the broader macro backdrop argues against the degree of tightening currently priced, as “the UK’s negative output gap, a policy rate above the mid-point of the BoE’s 2% to 4% neutral range estimate and the prospect of tighter fiscal policy all argue for a less aggressive hiking cycle.” In the daily chart, GBP/USD remains positioned above the lower Bollinger Band and the 100-day moving average, sustaining a mildly bullish short-term bias even as the price dips slightly below the 20-day Bollinger simple moving average.
The Relative Strength Index around 53 indicates a position near neutral territory, implying a consolidative tone rather than an exaggerated movement, as the spot remains between the underlying trend support and the upper boundary of the recent volatility envelope. A daily close below this cluster would weaken the constructive bias and pave the way for a deeper decline. On the downside, initial support seems around the lower Bollinger Band near 1.3455, with the 100-day MA at 1.3445 confirming this demand region. On the topside, immediate resistance is observed at the 20-day Bollinger SMA around 1.3560, with the upper Bollinger Band near 1.3660 serving as the subsequent obstacle; a breach above these levels would indicate a resurgence of upward momentum toward the recent peaks.
