PPI Countdown: GBP/USD technicals show a "golden cross"; beware of a break below 1.37 triggering an algorithmic buying wave
2025-08-14 17:15:56
The British pound strengthened across the board on Thursday (August 14), thanks to strong UK GDP and manufacturing data. The Office for National Statistics (ONS) data showed that the economy grew by 0.3% quarter-on-quarter in the second quarter, beating expectations for a 0.1% increase. GDP growth in the first quarter reached 0.7%.
The UK economy grew by 0.4% month-on-month in June (the previous value was revised to a decline of 0.1%), far exceeding market expectations of a 0.1% increase.
Industrial data also showed strong performance: manufacturing output and industrial production increased by 0.5% and 0.7% month-on-month respectively in June, rebounding from the significant decline in May.
Upbeat GDP and industrial data suggested the UK economy was performing better than expected – a development that could save the Bank of England (BoE) from aggressive interest rate cuts, lending support to the pound.
At its monetary policy meeting earlier this month, the Bank of England (BoE) cut interest rates by 25 basis points to 4.00% and maintained its "gradual and prudent" monetary easing policy guidance. However, the decision was highly divided, with four of the nine monetary policy committee members voting to keep interest rates unchanged.
Daily Market Brief: GBP/USD hits new monthly high
GBP/USD jumped to around 1.3600 during European trading on Thursday - after the release of UK GDP data, market expectations for the Bank of England to maintain its hawkish stance increased.
The dollar remained under pressure as traders widely expected the Federal Reserve to cut interest rates at its September monetary policy meeting. The U.S. dollar index (DXY), which tracks the greenback against six major currencies, hovered fragilely near a two-week low of 97.85.
The CME FedWatch tool shows that the market has fully priced in a 25 basis point rate cut in September, which would bring the federal funds rate down to a range of 4.00-4.25%.
The strengthening expectations of a Fed rate cut are mainly due to: ① the cooling of the labor market ② the latest CPI report shows that tariffs have limited impact on inflation.
The U.S. non-farm payrolls report released earlier this month showed fewer new jobs added in July than expected, and data for May and June were significantly revised downward. However, Tuesday's CPI report showed that overall inflation rose by 0.2% month-over-month, as expected (from 0.3% previously), with no evidence that tariffs were significantly pushing up prices.
In an interview with Bloomberg Television on Wednesday, U.S. Treasury Secretary Scott Besant called for aggressive easing from the Federal Reserve, citing labor market concerns. He predicted a "series of rate cuts" and advocated for a sharp 50 basis point cut at the September meeting, saying "current rates are overly restrictive and should be cut by 150-175 basis points."
Market focus shifted today to the US July PPI data, due to be released at 8:30 PM Beijing Time. Market expectations: On a monthly basis, both headline and core PPI are expected to rise by 0.2% (after zero growth in June); on an annual basis, headline and core PPI are expected to accelerate to 2.5% and 2.9%, respectively.
Technical analysis: GBP rises to around 1.3600
(GBP/USD daily chart, source: Yihuitong)
The GBP/USD exchange rate rose to around 1.3600 on Thursday, hitting a one-month high. As the exchange rate holds above the 20-day exponential moving average (EMA) of 1.3445, the short-term trend of GBP/USD remains bullish.
The 14-day relative strength index (RSI) has broken through the 60 mark. If the indicator can stabilize above this level, it may trigger a new round of upward momentum.
On the downside, the August 11 low of 1.3400 will form a key support area; on the upside, the July 1 high near 1.3790 will form an important resistance level.
At 17:10 Beijing time, the pound sterling was trading at 1.3582 against the US dollar.
The UK economy grew by 0.4% month-on-month in June (the previous value was revised to a decline of 0.1%), far exceeding market expectations of a 0.1% increase.
Industrial data also showed strong performance: manufacturing output and industrial production increased by 0.5% and 0.7% month-on-month respectively in June, rebounding from the significant decline in May.
Upbeat GDP and industrial data suggested the UK economy was performing better than expected – a development that could save the Bank of England (BoE) from aggressive interest rate cuts, lending support to the pound.
At its monetary policy meeting earlier this month, the Bank of England (BoE) cut interest rates by 25 basis points to 4.00% and maintained its "gradual and prudent" monetary easing policy guidance. However, the decision was highly divided, with four of the nine monetary policy committee members voting to keep interest rates unchanged.
Daily Market Brief: GBP/USD hits new monthly high
GBP/USD jumped to around 1.3600 during European trading on Thursday - after the release of UK GDP data, market expectations for the Bank of England to maintain its hawkish stance increased.
The dollar remained under pressure as traders widely expected the Federal Reserve to cut interest rates at its September monetary policy meeting. The U.S. dollar index (DXY), which tracks the greenback against six major currencies, hovered fragilely near a two-week low of 97.85.
The CME FedWatch tool shows that the market has fully priced in a 25 basis point rate cut in September, which would bring the federal funds rate down to a range of 4.00-4.25%.
The strengthening expectations of a Fed rate cut are mainly due to: ① the cooling of the labor market ② the latest CPI report shows that tariffs have limited impact on inflation.
The U.S. non-farm payrolls report released earlier this month showed fewer new jobs added in July than expected, and data for May and June were significantly revised downward. However, Tuesday's CPI report showed that overall inflation rose by 0.2% month-over-month, as expected (from 0.3% previously), with no evidence that tariffs were significantly pushing up prices.
In an interview with Bloomberg Television on Wednesday, U.S. Treasury Secretary Scott Besant called for aggressive easing from the Federal Reserve, citing labor market concerns. He predicted a "series of rate cuts" and advocated for a sharp 50 basis point cut at the September meeting, saying "current rates are overly restrictive and should be cut by 150-175 basis points."
Market focus shifted today to the US July PPI data, due to be released at 8:30 PM Beijing Time. Market expectations: On a monthly basis, both headline and core PPI are expected to rise by 0.2% (after zero growth in June); on an annual basis, headline and core PPI are expected to accelerate to 2.5% and 2.9%, respectively.
Technical analysis: GBP rises to around 1.3600
(GBP/USD daily chart, source: Yihuitong)
The GBP/USD exchange rate rose to around 1.3600 on Thursday, hitting a one-month high. As the exchange rate holds above the 20-day exponential moving average (EMA) of 1.3445, the short-term trend of GBP/USD remains bullish.
The 14-day relative strength index (RSI) has broken through the 60 mark. If the indicator can stabilize above this level, it may trigger a new round of upward momentum.
On the downside, the August 11 low of 1.3400 will form a key support area; on the upside, the July 1 high near 1.3790 will form an important resistance level.
At 17:10 Beijing time, the pound sterling was trading at 1.3582 against the US dollar.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
