GBP – The British pound broke through the top of a triangle, further strengthening its technical outlook

Recent data showed a sharp increase in US initial jobless claims, coupled with weak non-farm payroll data, with a revised 911,000 jobs lost in the 12 months to March. These suggest a cooling of economic momentum. Meanwhile, U.S. consumer prices saw their largest month-over-month increase in seven months in August, but investors are prioritizing labor market slack over inflationary stickiness when forming their interest rate forecasts. The federal funds futures market has fully priced in a 25 basis point rate cut at the September 17 meeting and is betting on a 50 basis point cut.

The Bank of England is expected to hold its key policy rate steady on Thursday as inflation is gradually rising. Nearly three years ago, U.K. inflation briefly exceeded 11%, briefly retreated to the Bank of England's 2% target last year, but has since risen again, nearly doubling. With cost-of-living pressures unlikely to ease in the near term, Bank of England Governor Andrew Bailey recently stated that expectations for the pace of rate cuts are no longer as certain.

Technically, the GBP/USD pair has been trading within a triangle range in recent months, having just reached the top of 1.3530 on Friday and finally breaking through last Monday. Furthermore, the RSI and Stochastics indicators remain upward, suggesting further upward movement for the pound. Further resistance is anticipated at 1.36, having previously encountered resistance at this level on July 23rd and 24th. Therefore, a breakout above this level would further solidify the pound's strength, with reference to 1.37 and the July 1st high of 1.3788. The next level is expected to be towards 1.40. The nearest support is expected at 1.35 and 1.3420, with further support at 1.3330 and 1.3280.

Forecast range:
Resistance: 1.3600** - 1.3700 - 1.3788 - 1.4000*
Support: 1.3500 - 1.3420 - 1.3330 - 1.3280

Focus:
Wednesday
UK August CPI (2:00 PM)

Thursday
Bank of England Interest Rate Decision (7:00 PM)

Friday
UK August Retail Sales (2:00 PM)

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