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GBP/USD climbs to 1.3340 ahead of BoE meeting Fed speaker blitz

  • GBP/USD up 0.37%, trading near 1.3342 ahead of Thursday’s BoE decision.
  • BoE expected to cut Bank Rate to 4%; split vote likely among MPC members.
  • NIESR warns UK needs urgent tax hikes to fill £50B fiscal gap.
  • Fed’s Daly leans dovish after soft NFP; Kashkari still sees two cuts in 2025.

The GBP/USD climbs solidly during the North American session, up by 0.37% ahead of the Bank of England’s (BoE) meeting and as traders digest the recent Nonfarm Payroll figures, and over the weekend developments, that opened a spot for US President Trump to nominate a Fed Governor. At the time of writing, the pair trades at 1.3342.

Pound strengthens as BoE expected to cut by 25 bps; Trump seeks new Fed nominee after weekend shakeup

The Bank of England is expected to reduce rates by 25 basis points, to 4%, according to money market futures data. The decision is expected not to be unanimous, with banks like Morgan Stanley expected to hold, Catherine Mann, a 50 basis points cut, Swati Dhingra, and the rest of the Monetary Policy Committee (MPC) voting for a 25 basis points cut.

UK tabloids had focused on the fiscal situation after a report from the NIESR Institute, suggesting that Chancellor Rees-Mogg needs to raise taxes immediately to fill a gap of £50 billion in public finances. The Institute’s Deputy Director said that the scale of tax rises required would be a 5% increase to the basic and higher rates of income tax.

Across the pond, a scarce economic docket in the US would leave traders adrift to Fed speeches by Boston Fed Susan Collins, San Francisco’s Fed Mary Daly, and Fed Governor Lisa Cook. From the three, Daly recently crossed the wires and leaned dovish, saying that the central bank would not be waiting forever to ease policy.

Her reaction was attributed to last week’s Nonfarm Payrolls report, which showed extensive downward revisions to May and June prints. Nevertheless, there has been an uptick in prices as reported by ISM Services PMI. Although the PMI dipped from 50.8 to 50.1 in July, the employment sub-component fell into contraction, while the prices paid hit their highest level since October 2022. Those stagflationary figures spooked US equities on Tuesday.

In the meantime, Minneapolis Fed Neel Kashkari reiterated that he sees two rate cuts this year.

On Thursday, the US economic is expected to unveil the latest Initial Jobless Claims figures for the week ending August 2, alongside Atlanta's Fed Raphael Bostic speech.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has printed four bullish days after a ‘morning star’ surfaced on the bad NFP print, sending the Pound higher. Nevertheless, bulls are not out of the woods. Momentum, although improved as depicted by the Relative Strength Index (RSI), remains bearish. This and strong resistance levels lying overhead, like the 100-day SMA at 1.3369 and the 20-day SMA at 1.3398, would need to be cleared so that buyers can challenge 1.3400.

On the flipside, if GBP/USD slides below 1.3300, the downtrend could resume with bears eyeing a test of the latest cycle low seen at 1.3141 the August 1 low.

GBP/USD Daily chart

British Pound PRICE This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.46%-0.55%0.00%-0.28%-0.36%-0.45%0.01%
EUR0.46%-0.04%0.45%0.18%-0.04%0.00%0.46%
GBP0.55%0.04%0.53%0.22%0.00%0.04%0.50%
JPY0.00%-0.45%-0.53%-0.28%-0.51%-0.45%0.19%
CAD0.28%-0.18%-0.22%0.28%-0.24%-0.16%0.28%
AUD0.36%0.04%-0.00%0.51%0.24%0.05%0.51%
NZD0.45%-0.00%-0.04%0.45%0.16%-0.05%0.44%
CHF-0.01%-0.46%-0.50%-0.19%-0.28%-0.51%-0.44%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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