GBP/USD fell back to 1.3640, with the market focusing on the latest economic data from the US and UK and the Fed's policy.
2025-09-17 11:40:08
GBP/USD edged lower to 1.3640 during Asian trading on Wednesday, marking a technical correction after two consecutive days of gains. The British pound was cautious ahead of the release of the latest UK inflation data, with investors focusing on August CPI and Retail Price Index (RPI) data to gauge the Bank of England's (BoE) upcoming interest rate decision.
Market expectations indicate that the UK's annual inflation rate will rise from 3.8% to 3.9% in August, with monthly inflation likely to rise from 0.1% to 0.3%. If inflationary pressures accelerate, it may reinforce expectations that the Bank of England will maintain interest rates at 4%, providing support for the pound.
Regarding the dollar, the Federal Reserve is widely expected to cut interest rates by 25 basis points at its meeting on Wednesday and may continue to cut interest rates at its remaining meetings this year. Morgan Stanley and Deutsche Bank expect the Fed to cut interest rates by 25 basis points at each of its meetings in September, October and December.
U.S. retail sales data showed a month-on-month increase of 0.6% in August (revised to 0.6% in July), exceeding market expectations by 0.2%; Retail Sales Control Group and retail sales excluding autos increased by 0.7% respectively, exceeding expectations by 0.4%.
Data showed that U.S. consumer spending remained resilient even as inflation remained high and the labor market slowed, further supporting market expectations of multiple interest rate cuts by the Federal Reserve.
According to the CME FedWatch tool, the market has almost fully priced in the possibility of a 25 basis point rate cut by the Federal Reserve on Wednesday. Investors will also focus on the Fed's Summary of Economic Projections (SEP) and the dot plot to determine the future path of interest rates.
On the daily chart, the short-term support level is 1.3620–1.3640. If it falls below, it may fall further to 1.3600. The upper resistance level is 1.3680–1.3700. After breaking through, it may return to the recent high of 1.3750.
The price is currently hovering above the 20-day moving average, suggesting a short-term bullish trend, but whether it holds remains to be seen. The RSI is near 55, indicating a slightly bullish bias; the MACD maintains moderate bullish momentum, suggesting continued upward momentum, but caution is warranted regarding volatility due to changes in US dollar policy.
Overall, GBP/USD still has room for a short-term rebound, but we need to pay attention to the short-term trend of the US dollar and the market reaction after the release of UK inflation data.
Editor's opinion:
The short-term trend of GBP/USD is affected by two factors: UK inflation data may support the pound, especially before the BoE interest rate decision, as investors focus on the pound's resilience; expectations of a Fed rate cut put pressure on the dollar, which will help support the pound.
In the short term, GBP/USD is likely to fluctuate between 1.3600 and 1.3700. Focus should be placed on UK CPI/RPI data and the Fed's dot plot. If the US dollar weakens unexpectedly, the pound could reclaim its recent highs. If the US dollar rebounds, the pound should be wary of a potential pullback.
Market expectations indicate that the UK's annual inflation rate will rise from 3.8% to 3.9% in August, with monthly inflation likely to rise from 0.1% to 0.3%. If inflationary pressures accelerate, it may reinforce expectations that the Bank of England will maintain interest rates at 4%, providing support for the pound.
Regarding the dollar, the Federal Reserve is widely expected to cut interest rates by 25 basis points at its meeting on Wednesday and may continue to cut interest rates at its remaining meetings this year. Morgan Stanley and Deutsche Bank expect the Fed to cut interest rates by 25 basis points at each of its meetings in September, October and December.
U.S. retail sales data showed a month-on-month increase of 0.6% in August (revised to 0.6% in July), exceeding market expectations by 0.2%; Retail Sales Control Group and retail sales excluding autos increased by 0.7% respectively, exceeding expectations by 0.4%.
Data showed that U.S. consumer spending remained resilient even as inflation remained high and the labor market slowed, further supporting market expectations of multiple interest rate cuts by the Federal Reserve.
According to the CME FedWatch tool, the market has almost fully priced in the possibility of a 25 basis point rate cut by the Federal Reserve on Wednesday. Investors will also focus on the Fed's Summary of Economic Projections (SEP) and the dot plot to determine the future path of interest rates.
On the daily chart, the short-term support level is 1.3620–1.3640. If it falls below, it may fall further to 1.3600. The upper resistance level is 1.3680–1.3700. After breaking through, it may return to the recent high of 1.3750.
The price is currently hovering above the 20-day moving average, suggesting a short-term bullish trend, but whether it holds remains to be seen. The RSI is near 55, indicating a slightly bullish bias; the MACD maintains moderate bullish momentum, suggesting continued upward momentum, but caution is warranted regarding volatility due to changes in US dollar policy.
Overall, GBP/USD still has room for a short-term rebound, but we need to pay attention to the short-term trend of the US dollar and the market reaction after the release of UK inflation data.
Editor's opinion:
The short-term trend of GBP/USD is affected by two factors: UK inflation data may support the pound, especially before the BoE interest rate decision, as investors focus on the pound's resilience; expectations of a Fed rate cut put pressure on the dollar, which will help support the pound.
In the short term, GBP/USD is likely to fluctuate between 1.3600 and 1.3700. Focus should be placed on UK CPI/RPI data and the Fed's dot plot. If the US dollar weakens unexpectedly, the pound could reclaim its recent highs. If the US dollar rebounds, the pound should be wary of a potential pullback.
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