Pound Sterling Price News and Forecast: GBP/USD steadies following the previous day bounce

British Pound consolidates around mid-1.3300s vs USD; upside potential seems limited

The GBP/USD pair struggles to capitalize on the previous day's modest bounce from the 1.3300 neighborhood, or over a three-week low, and seesaws between tepid gains/minor losses during the Asian session on Tuesday. Spot prices currently trade around mid-1.3300s amid a softer US Dollar (USD), though the fundamental backdrop warrants some caution before positioning for any meaningful appreciation.

Iran’s army announced on Monday that its attack on Israel was over, though it warned that further strikes on Lebanon would open the door for retaliation. Israeli Prime Minister Benjamin Netanyahu acknowledged the halt in fighting with Iran, but he vowed to respond with force to future attacks. This, in turn, drags the safe-haven USD further away from its highest level since late March, touched the previous day, and offers some support to the GBP/USD pair. Read more...

The British Pound Sterling has the best rate in the G7 and the chart of a laggard

Pound Sterling is supposed to be the high-carry name in the G7, and for most of this year that logic held. So it is telling that GBP/USD spent Friday and Monday on the wrong side of its 200-day moving average, a level it had not closed below in weeks, with the Bank of England (BoE) base rate at 3.75% and still the steepest in the developed world. The Pound's problem is not its own central bank. It is that the US is repricing faster in the other direction, and the British economy is starting to look like it cannot afford the rates it is being forced to keep.

Friday's US Nonfarm Payrolls (NFP) report did the damage: 172K jobs against a consensus near 85K, hefty upward revisions, and a market now pricing roughly 72% odds of higher US rates by December on CME FedWatch, a clear lean toward at least one Federal Reserve (Fed) hike rather than a cut. That repricing lifted the Dollar across the board and pushed Cable down through its 200-period Exponential Moving Average (EMA) near 1.3400, a clean technical break that flips the medium-term tone. A rate gap only supports a currency when the other side is standing still. With the Fed turning hawkish, Sterling's carry edge is shrinking from both ends. Read more...