Technical Analysis: GBP/USD consolidates ahead of key central bank decisions
2025-09-11 19:54:08
GBP/USD exchange rate fluctuated in a narrow range around $1.3521 on Thursday, with limited movement as the market awaits key US inflation data and major policy meetings of the Federal Reserve and the Bank of England next week.
The pound has gradually recovered from an early September sell-off that saw concerns about Britain's fiscal sustainability drive the currency to a monthly low and push long-term UK government bond yields to their highest level since the late 1990s.
One reason the pound has found support is investor expectations that the Bank of England will avoid aggressive interest rate cuts, especially as other major central banks, including the Federal Reserve, have shifted toward easing policies. Another factor is persistently high inflation in the UK: it remains the highest among the Group of Seven (G7) economies, with price increases in services and wage growth being particularly sticky.
Recent data suggests the UK economy remains resilient despite persistent inflationary pressures and some softening in the labor market. Against this backdrop, Chancellor of the Exchequer Rachel Reeves faces increasing pressure to maintain fiscal stability without breaching government borrowing rules. Markets will be closely watching the next budget, due in November.
Technical Analysis
On the 4-hour chart, GBP/USD has begun a correction from its recent high of $1.3590, potentially pushing the pair down to support near $1.3420. If this correction ends, the pair could rebound from this support level, initiating a new upward trend. Initial resistance is at $1.3548, above which it could retest the previous high of $1.3590.
The MACD indicator (Moving Average Convergence Divergence) also supports this view: although the histogram and signal line are still above the zero line, both are trending downwards, indicating that there is short-term downward momentum within the overall consolidation pattern.
On the 1-hour chart, GBP/USD has tested the $1.3517 level and is currently in a correction phase. The short-term downside target is the $1.3485 support level. If it falls below this level, the correction may extend further, pointing to a deeper support area.
In the stochastic indicator KDJ, the J value is at a relatively high level, showing signs of decline. There may be adjustment pressure in the short term, but there is still upward momentum overall.
in conclusion
GBP/USD is trending cautiously as markets prepare for next week's central bank decision. While the Bank of England's relatively hawkish policy outlook and high inflation continue to support the pound, the near-term direction of the exchange rate will likely be determined by two factors: the tone of the Federal Reserve's policy statement and subsequent UK fiscal developments.
From a technical perspective, GBP/USD is in a short-term correction, which could provide a buying opportunity if key support levels hold.
The pound has gradually recovered from an early September sell-off that saw concerns about Britain's fiscal sustainability drive the currency to a monthly low and push long-term UK government bond yields to their highest level since the late 1990s.
One reason the pound has found support is investor expectations that the Bank of England will avoid aggressive interest rate cuts, especially as other major central banks, including the Federal Reserve, have shifted toward easing policies. Another factor is persistently high inflation in the UK: it remains the highest among the Group of Seven (G7) economies, with price increases in services and wage growth being particularly sticky.
Recent data suggests the UK economy remains resilient despite persistent inflationary pressures and some softening in the labor market. Against this backdrop, Chancellor of the Exchequer Rachel Reeves faces increasing pressure to maintain fiscal stability without breaching government borrowing rules. Markets will be closely watching the next budget, due in November.
Technical Analysis
On the 4-hour chart, GBP/USD has begun a correction from its recent high of $1.3590, potentially pushing the pair down to support near $1.3420. If this correction ends, the pair could rebound from this support level, initiating a new upward trend. Initial resistance is at $1.3548, above which it could retest the previous high of $1.3590.
The MACD indicator (Moving Average Convergence Divergence) also supports this view: although the histogram and signal line are still above the zero line, both are trending downwards, indicating that there is short-term downward momentum within the overall consolidation pattern.
On the 1-hour chart, GBP/USD has tested the $1.3517 level and is currently in a correction phase. The short-term downside target is the $1.3485 support level. If it falls below this level, the correction may extend further, pointing to a deeper support area.
In the stochastic indicator KDJ, the J value is at a relatively high level, showing signs of decline. There may be adjustment pressure in the short term, but there is still upward momentum overall.
in conclusion
GBP/USD is trending cautiously as markets prepare for next week's central bank decision. While the Bank of England's relatively hawkish policy outlook and high inflation continue to support the pound, the near-term direction of the exchange rate will likely be determined by two factors: the tone of the Federal Reserve's policy statement and subsequent UK fiscal developments.
From a technical perspective, GBP/USD is in a short-term correction, which could provide a buying opportunity if key support levels hold.
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