|

GBP/USD pierces 1.3300 on US data, Fed takes the spotlight

  • United States first-tier data releases showed why it is the world’s largest economy.
  • The Federal Reserve will announce its decision on monetary policy in the American afternoon.
  • GBP/USD trades at its lowest since mid-May, without signs of downward exhaustion.

The GBP/USD pair shed over 60 pips early in the American session on Wednesday and defies the 1.3300 figure, as investors weigh better-than-expected United States (US) data. The Sterling Pound (GBP) held ground throughout the first half of the day, but capitulated to broad US Dollar (USD) demand.

US economic resilience largely proved

Without data from the United Kingdom, the focus is on the US, which released several first-tier figures. On the one hand, the the July ADP Employment Change report showed that the private sector added 104K new positions in July, much better than the 78K expected. Furthermore, June reading was revised to -23K, better than the -33K previously reported.

The country then reported the flash estimate of the Q2 Gross Domestic Product (GDP), showing that the economy expanded at an annual rate of 3% in the second quarter, much better than the 2.4% anticipated or the -0.5% from Q1. Finally, the core Personal Consumption Expenditures (PCE) Price Index rose by 2.5% in the same quarter, down from the 3.5% posted in the three months to March.

The combination of upbeat figures showed the US economy is beyond resilient in a critical moment: the Federal Reserve (Fed) will announce its decision on monetary policy in the American afternoon. The Fed is widely anticipated to keep the benchmark interest rate on hold, floating between 4.25% and 4.50% amid policymakers’ concerns related to the potential impact of tariffs on the economy.

US President Donald Trump has expressed his anger at the Fed’s stubbornness to keep interest rates so high, and demanded that it be trimmed by at least 3 points. Whereas the Fed announces today, the focus will clearly be on the President's response to the decision. Fresh threats to fire Chair Jerome Powell will likely be at the top of Trump’s list.

Technical perspective: Lower lows in sight

The GBP/USD pair has fallen for six consecutive days and currently trades at levels that were last seen in mid-May. The strong downward momentum is clear in intraday time frames with technical indicators in the 4-hour chart heading south within oversold readings but far from suggesting downward exhaustion.

The first line of buyers stands at around 1.3250, followed by the 1.3200 mark. A break below the latter will back the case of a steeper decline towards the critical 1.3000 threshold. On the upside, investors will be looking for a recovery beyond 1.3360 before feeling confident enough to add longs, aiming them for a test of the 1.3420 area.

British Pound PRICE Today

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

USDEURGBPJPYCADAUDNZDCHF
USD0.69%0.37%0.42%0.32%0.86%0.60%0.70%
EUR-0.69%-0.30%-0.38%-0.40%0.11%-0.09%0.05%
GBP-0.37%0.30%-0.04%-0.04%0.45%0.24%0.36%
JPY-0.42%0.38%0.04%-0.01%0.52%0.27%0.37%
CAD-0.32%0.40%0.04%0.01%0.54%0.28%0.41%
AUD-0.86%-0.11%-0.45%-0.52%-0.54%-0.20%-0.08%
NZD-0.60%0.09%-0.24%-0.27%-0.28%0.20%0.12%
CHF-0.70%-0.05%-0.36%-0.37%-0.41%0.08%-0.12%

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

FXStreet Team

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

More from FXStreet Team
Share:

Editor's Picks

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold extends losing spree as US bond yields hold ground

Gold extends its losing streak for the fourth trading day on Wednesday, trading 0.2% lower to near $4,115 in the Asian session. The precious metal is under pressure as United States Treasury Yields on the back of significant gains in oil prices in past few weeks.

Bitcoin gains strength as Ethereum and Ripple selling eases

Top three cryptocurrencies, Bitcoin, Ethereum, and Ripple, are holding steady on Wednesday after a bullish close the previous day. The mild recovery hints at an extended rally as the prevailing bearish pressure eases. Bitcoin trades at $82,930 on Wednesday, holding a bullish near-term bias following a mild rebound the previous day.

US – Midterm update: Pre-election tail risk scenarios
With two weeks until the US midterm elections on 3 November, early voting has already opened in more than 40 states. Prediction markets are broadly unchanged since we published our Midterm update, 13 October. The prediction market Polymarket continues to see Democrats winning both chambers as the most likely outcome, with a 62.5% probability.
The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.