GBPUSD
forecast & analysis

Underlying trend:

Cautiously bearish with two-way risk — GBP stabilising near its 100-day moving average; USD near-term resilient but medium-term bearish bias building.

Last week's key drivers:

• BoE Governor Bailey said the bank was "in no rush" to raise rates — markets now pricing just 35 basis points of hikes, down sharply from over 80 basis points previously
• USD remained supported on haven flows and higher-for-longer expectations
• UK manufacturing grew at its fastest pace in four years in May — though the move was largely front-loading driven and unlikely to persist

This week (Mon–Fri preview):

• Monday: UK and US manufacturing PMIs final; ISM manufacturing (53.2 expected) and ISM prices paid (85 expected) — a hot prices paid reading reinforces inflation concerns and supports USD
• Tuesday: UK mortgage approvals (62k expected); US JOLTS job openings (6,890k expected)
• Wednesday: ADP employment (120k expected); ISM Services (53.7 expected); US factory orders (4.3% expected). Final UK and US services PMIs also print
• Thursday: US initial jobless claims — labour market health check ahead of Friday
• Friday: US non-farm payrolls — the defining release of the week. 93k expected with unemployment at 4.3%. A significant miss deepens the Fed's stagflation dilemma and extends USD weakness; a beat reasserts dollar strength

Key risks:

• US payrolls Friday is the dominant event — a miss below the already-weak consensus would be the most significant near-term USD negative and the clearest catalyst for GBP recovery
• Hot ISM prices paid Monday reinforces higher-for-longer and caps any GBP recovery attempt
• Continued weak UK data compounds the dovish BoE repricing and limits recovery potential

Most likely direction:

Two-way risk. USD resilience near-term versus building medium-term easing expectations — payrolls Friday is the week's defining swing factor.

Underlying trend:

Bearish — GBP undermined by dovish BoE repricing; USD well supported on higher-for-longer expectations.

Last week's key drivers:

• A clean sweep of weak UK data — jobs, inflation, retail sales and PMIs all disappointed — drove a sharp dovish repricing of BoE rate expectations
• Markets now pricing just one quarter-point BoE hike with a 60% chance of a second, down from two hikes previously priced in
• USD remains broadly supported — markets pricing a 78% chance of a Fed rate hike by December as inflation concerns persist
• A BoE policymaker suggested holding rates steady might be sufficient to control inflation — further undercutting the rate support for GBP

This week (Mon–Fri preview):

• Today: US consumer confidence — first read on USD sentiment this week
• Wednesday: US PCE — the key event of the week. An upside surprise cements higher-for-longer and strengthens USD; a soft print would provide some GBP/USD relief

Key risks:

• Hot US PCE Wednesday is the most significant near-term risk — reinforces the Fed higher-for-longer narrative and puts immediate support at 1.34 under pressure
• A break below the May low opens the path toward the April lows.

Most likely direction:

Bearish. The rate differential is moving firmly against GBP — US PCE Wednesday is the swing factor for the week.

Underlying trend:

Bearish — GBP taking a double hit from political turmoil and a broadly stronger USD.

Last week's key drivers:

• Sterling fell 2.24% last week — its worst performance since November 2024 — as UK political chaos and USD strength combined
• USD rallied for a fifth straight session on surging oil prices and hawkish inflation data; markets now pricing a 70% chance of a Fed rate hike by December
• Andy Burnham announced plans to return to Parliament, widely seen as a direct leadership challenge to Starmer; the Makerfield by-election a key hurdle for Burnham to overcome

This week (Mon–Fri preview):

• Tuesday: UK employment data — wages and unemployment the first domestic read of the week
• Wednesday: UK CPI — headline 3.0% expected from 3.3%; core 2.6% from 3.1%. Softer inflation reduces BoE hike support for GBP. FOMC minutes (7:00 PM BST) — hawkish signals add a second wave of USD buying
• Thursday: Flash PMIs — UK composite seen at 51.6 versus US at 51.7. US jobless claims and Philadelphia Fed also due
• Friday: UK retail sales expected at -0.5% MoM; University of Michigan sentiment (48.2 final)

Key risks:

• FOMC minutes Wednesday evening is the key USD catalyst — any hawkish lean extends USD rally and puts immediate support under serious pressure
• Soft UK CPI Wednesday alongside resilient US data widens the rate differential further in USD's favour
• Upside capped — the broken moving averages now act as resistance

Most likely direction:

Lower. Political risk and USD strength leave GBP with little near-term support — immediate support is the critical level to watch this week.

Underlying trend:

Cautiously bearish — GBP under political pressure; USD regaining haven support on renewed Iran escalation.

Last week's key drivers:

• UK local election losses proved devastating for Labour — political risk premium on GBP has increased materially, with calls for Starmer to step down growing
• US non-farm payrolls significantly overshot expectations, delivering a firm USD recovery into the weekend close
• Oil's dramatic swing — above $115 to below $97 and back — drove most of the week's volatility before USD finished little changed
• BoE's hawkish pivot provides structural GBP support, but political uncertainty is increasingly undermining the rate story
• This morning, Trump rejecting Iran's peace proposal and fresh Gulf drone strikes have reasserted USD haven demand — GBP among the biggest laggards

This week (Mon–Fri preview):

• Tuesday: US CPI — headline expected at 3.7% YoY from 3.3%; core at 2.7% from 2.6%. A hot print reinforces higher-for-longer and supports USD
• Thursday: UK Q1 GDP (07:00 BST) — consensus 0.6% QoQ. The key domestic catalyst for GBP this week. US retail sales also due, expected to slow sharply to 0.5% from 1.7%
• Thursday/Friday: Trump-Xi summit — risk sentiment wildcard

Key risks:

• Hot US CPI Tuesday is the most significant near-term USD positive
• UK GDP Thursday is the defining GBP moment — a beat provides political and economic cover; a miss accelerates the downside
• Further Hormuz escalation drives USD haven flows and caps any GBP recovery

Most likely direction:

Cautiously bearish. US CPI and UK GDP are the swing factors — the pair needs resilient domestic data and USD softness to recover.

Underlying trend:

Bullish but capped — GBP at its strongest since early March, running into critical resistance with tomorrow's elections the key near-term risk.

This week's key drivers (Mon–Tue):

• GBP/USD has gained on the back of broad USD weakness driven by US-Iran peace deal optimism, with the pair advancing to its highest level since early March
• The BoE's hawkish pivot last week — scrapping its central inflation forecast and replacing it with three scenarios all pointing to hikes — continues to provide structural GBP support
• GBP has been the third-best performing major currency since March, though the rally is now running into a critical technical barrier — a level that has so far capped progress
• Political risk is the key near-term headwind — local elections could quickly reverse recent gains if Labour suffers the heavy losses widely expected

Rest of the week (Thu–Fri preview):

• Thursday: UK local elections — a bad result adds political risk premium and could trigger a sharp intraday GBP selloff, with the Fibonacci resistance level already in play
• Friday: US non-farm payrolls — the defining release of the week for USD. Unemployment expected at 4.4%; payrolls potentially at -15k versus a 60k consensus. A significant miss would extend dollar weakness and push the pair higher; a beat would snap back recent gains

Key risks:

• A poor election result Friday morning combined with a USD recovery on strong payrolls Friday would be the most bearish near-term outcome for the pair
• Hormuz developments remain a background tailwind — any genuine ceasefire progress keeps the risk-on mood supportive for GBP

Most likely direction:

Bullish bias intact but capped near current levels. Election risk tomorrow and payrolls Friday make for an elevated volatility end to the week — a clean sweep of positive outcomes would finally clear the resistance barrier

Underlying trend:

Cautiously bullish — GBP supported by BoE hawkish repricing; USD structurally weak but Friday's payrolls introduce significant two-way risk.

Last week's key drivers:

• BoE scrapped its central inflation forecast and replaced it with three scenarios — all pointing to hikes ahead. The most hawkish signal the MPC has delivered this cycle and a clear GBP positive
• USD fell in four of five sessions — its fourth weekly decline in five — as weak US Q1 GDP, a soft ISM print and above-consensus PCE deepened the Fed's stagflation dilemma
• The Fed's most divided vote since 1992 reinforced the policy paralysis narrative, keeping USD on the back foot despite sticky inflation
• Iran's new Hormuz peace proposal drove risk-on flows and added further downward pressure on the dollar through the week
• The combination of BoE hawkishness and Fed paralysis creates a meaningful rate differential shift in GBP's favour — the structural backdrop for the pair has improved materially

This week (Mon–Fri preview):

• Thursday: UK local elections — Labour expected to lose heavily. A bad result adds political risk premium to GBP and could create a sharp intraday move lower
• Friday: Non-farm payrolls — the defining release of the week for USD. Unemployment expected to rise to 4.4%; payrolls potentially falling to -15k versus a 60k consensus. Weak job data alongside sticky inflation deepens the Fed's stagflation dilemma and extends USD weakness — a GBP/USD positive

Key risks:

• A catastrophic UK local election result Thursday could temporarily overwhelm the BoE hawkish repricing and hit GBP hard — the political risk premium for GBP is real and underpriced
• Payrolls Friday are the dominant USD driver — a miss of the already-weak consensus would accelerate dollar selling and push the pair higher; an upside surprise would snap back recent GBP gains
• ISM Services prices paid today is the first stagflation data point of the week — a hot reading would reinforce Fed paralysis and keep USD offered
• Hormuz developments remain a background factor — any genuine progress on Iran's proposal would add to risk-on flows and support the pair

Most likely direction:

Bullish bias. BoE hawkish pivot versus Fed paralysis is a supportive structural backdrop. Election risk Thursday and payrolls Friday are the key volatility events — a clean sweep of weak US data and a manageable election result would push the pair meaningfully higher

Underlying trend:

Range-bound with downside risk — GBP pressured by stagflation concerns and political noise; USD well supported on escalating haven demand.

Last three days' key drivers (Mon–Wed):

• GBP/USD has slipped from Monday's near-recent highs, trading to a week low Wednesday as oil surged and haven USD demand reasserted itself
• PM Starmer's parliamentary vote on the Mandelson appointment investigation added a fresh political risk premium to GBP on Monday — poorly timed ahead of Thursday's BoE decision
• UK gilt yields hit multi-month highs Tuesday as the NIESR warned of recession risk if the Middle East crisis deepens — stagflation fears building for the domestic economy
• US Conference Board consumer confidence slipped to around 90 from 91.8 — higher energy costs squeezing discretionary spending — though the data did little to dent USD haven demand
• Fed held rates at 3.50–3.75% as expected; Powell's press conference the key moment — a hawkish tone reinforcing higher-for-longer would add further USD support
• Oil surging 7% overnight Wednesday to around $126 on Trump military strike briefing reports has put the pair under fresh pressure — USD haven bid is back in force

Rest of the week (Thu–Fri preview):

• Thursday: the most consequential day of the week
• BoE holds at 3.75%; markets pricing 8-1 vote split and three hikes — any dovish guidance surprise hits GBP
• US Core PCE expected at 3.2% YoY from 3.0%; US Q1 GDP expected to rebound to 2.0% from 0.5% — both USD positive on an upside surprise
• US employment cost index (0.8% expected) and initial jobless claims also due
• Friday: US ISM manufacturing (53.3 expected from 52.7); ISM prices paid (82 from 78.3) — a hot prices paid reading would reinforce inflation concerns and support USD

Key risks:

• A dovish BoE surprise alongside hot US PCE and strong GDP Thursday would be the most bearish outcome for the pair this week
• Oil at $126 and potential US military action against Iran is the dominant wildcard — further escalation drives USD haven flows and puts the pair's recent range under serious pressure
• Conversely, any ceasefire progress would remove USD haven support and allow GBP to recover — though as recent sessions show, the bar for a sustained geopolitical relief rally is rising

Most likely direction:

Downside bias. The confluence of BoE risk, hot US data expectations and oil escalation all point toward the lower end of the recent range — a break lower cannot be ruled out if Thursday delivers on the bearish case

Underlying trend:

Cautiously bullish — GBP supported by data outperformance and fading haven USD demand, but central bank super week introduces significant two-way risk

Last week's key drivers:

• UK PMIs beat heavily at 52.0 versus 49.8; BoE rate hike expectations repriced sharply to 61 basis points with two hikes now fully priced
• UK retail sales beat; GBP was the best performing G10 currency on Friday
• USD softened mid-week as Trump extended the Iran ceasefire indefinitely, though Iranian gunboat incidents repeatedly interrupted the dollar selloff
• This morning, Iran's new Hormuz proposal has extended USD weakness — though the muted reaction suggests geopolitical fatigue is building
• Kevin Warsh's Fed Chair confirmation advancing, with a Senate Banking Committee vote scheduled April 29 — a background USD structural signal

This week (Mon–Fri preview):

• Tuesday: US Conference Board consumer confidence expected to slip to around 90 from 91.8 — energy costs squeezing discretionary spending
• Wednesday: Fed holds at 3.50–3.75%; Powell's press conference the key USD moment. We expect hold through Q3, then 50 basis point cuts in Q4. US housing starts and durable goods also print
• Thursday: US Core PCE expected at 3.2% YoY; US Q1 GDP expected to rebound to 2.0% from 0.5%. BoE decision and vote split also critical for GBP direction
• Friday: ISM manufacturing expected at 52.2 from 52.7

Key risks:

• A hawkish Powell emphasising energy-driven inflation would strengthen USD and pressure the pair lower
• Core PCE above consensus alongside a GDP beat would be the most significant USD positive of the week
• A dovish BoE surprise — particularly on forward guidance — would weigh on GBP regardless of USD direction
• Hormuz progress remains the wildcard — genuine de-escalation removes a key pillar of USD haven support

Most likely direction:

Two-way volatility elevated. Modest GBP positive bias on fading haven demand, but PCE and Powell are the swing factors

Underlying trend:

Range-bound — GBP capped by technical resistance and USD supported by resilient data; pair consolidating within a defined range.

Last three days' key drivers (Mon–Wed):

• GBP/USD has been oscillating within a tight range as competing drivers offset each other
• Monday's modest gains (+0.14%) were clawed back Tuesday as US retail sales beat forecasts, reviving USD demand and sending the pair back lower.
• UK employment data provided some support for GBP on Tuesday, limiting the USD gains
• UK CPI (3.3% in March, from 3.0%) met expectations Wednesday — energy-driven rather than demand-led, giving the BoE limited reason to turn more hawkish. GBP reaction was muted
• Trump extending the Iran ceasefire on Wednesday briefly softened the dollar, but reports of Iranian gunboats firing on ships in the Strait of Hormuz trimmed losses
• Treasury Secretary Bessent revealed Gulf and Asian nations have requested USD currency swap lines — a structural tailwind for the greenback that went largely unnoticed

Rest of the week (Thu–Fri preview):

• Thursday: US flash PMIs alongside UK readings, plus US initial jobless claims (consensus 210k vs 207k prior)
• US composite PMI expected to rise to 50.5 (from 50.3); manufacturing seen at 52.5 — relative resilience vs UK
• UK composite forecast at 49.8 (from 50.3) — slipping into contraction territory
• Friday: Quiet; markets digesting PMI data and monitoring Middle East developments ahead of the weekend

Key risks:

• US PMIs outperforming UK readings Thursday would reinforce divergence and put last week's support level back in play — a clean break lower opens further downside
• A UK PMI beat alongside soft US data would revive upside attempts, but the April high remains a formidable resistance zone given the failed Fibonacci retest
• Renewed Strait of Hormuz escalation is the wildcard — would likely benefit the USD safe-haven bid and cap any GBP recovery
• BoE policy remains in wait-and-see mode; this week's energy-driven CPI print does not materially shift the rate outlook, leaving GBP vulnerable to USD strength without a fresh domestic catalyst

Most likely direction (Thu–Fri):

Continued range trading. A decisive break in either direction likely requires a significant data surprise or geopolitical development

Underlying trend:

Neutral to bearish — GBPUSD failed to break above key resistance despite broad USD weakness following Iran de-escalation. The BoE's dovish tone contrasts with resilient US data expectations.

Last week's key drivers:

• The Strait of Hormuz reopened on Friday, with the USD Spot Index wiping out all gains since the Iran war began. However, losses against GBP were limited as the pair failed to break key resistance.
• UK GDP grew 0.5% in February — the strongest monthly reading since January 2024 — but the positive surprise was quickly offset by dovish BoE commentary. Bailey signalled no urgency to raise rates, Pill noted markets had moved too far ahead, and Breeden warned of a potential 'rocky ride.'
• UK political risk resurfaced as PM Starmer faced renewed calls to resign over the Mandelson security vetting controversy. GBP initially weakened but recovered by Friday's close after Starmer pledged to address the issue in Parliament this week.

The week ahead (Mon–Fri preview):

• Tuesday: UK jobs data (07:00 BST) — wage growth expected to slow to 3.6%, unemployment seen steady at 5.2%. US retail sales also print, forecast to rise to 1.3% from 0.6%.
• Wednesday: UK CPI (March) — expected at 3.3% YoY (vs 3.0%), driven by energy prices, increasing pressure on the BoE.
• Thursday: Flash PMIs — UK composite expected at 49.8 (from 50.3). US jobless claims and PMIs also due, with US composite seen at 50.5.
• Friday: UK retail sales (flat MoM expected) and US University of Michigan sentiment.

Key risks:

• Higher UK CPI may support GBP short term but deepens the stagflation risk backdrop.
• Strong US retail sales could pressure GBPUSD further.
• Ongoing UK political uncertainty adds volatility.
• Any renewed Hormuz disruption would favour USD safe-haven demand.

Underlying trend:

Neutral to cautiously bullish — though upside is limited near term

Factors in price action:

• Sterling was whipsawed by geopolitical developments throughout the week, initially rallying on Wednesday as the US-Iran ceasefire triggered broad dollar weakness and improved risk sentiment
• The collapse of peace talks over the weekend and Trump's announcement of a Strait of Hormuz blockade renewed safe-haven dollar demand, pressuring sterling lower into Monday
• The pair climbed for five consecutive sessions last week, hitting resistance at March highs before paring gains

Key data ahead (Mon–Fri):

• Monday: US Existing Home Sales (Mar) — consensus 4.08m vs. prior 4.09m
• Tuesday: US PPI Final Demand MoM (Mar) — consensus 1.2% vs. prior 0.7%; PPI Ex Food and Energy MoM — consensus 0.5% vs. prior 0.5%
• Wednesday: US Empire Manufacturing (Apr) — prior -0.2; Import Price Index MoM (Mar) — prior 1.3%
• Thursday: UK Industrial Production MoM (Feb) — consensus 0.3% vs. prior -0.1%; Manufacturing Production MoM — consensus 0.2% vs. prior 0.1%; Trade Balance — consensus -£2,000m vs. prior £3,922m; US Initial Jobless Claims (Apr 11) — prior 219k; Philadelphia Fed Business Outlook (Apr) — prior 18.1; Industrial Production MoM (Mar) — consensus 0.1% vs. prior 0.2%

Middle East developments:

• The Islamabad peace talks collapsed after 21 hours of negotiations over the weekend, with Trump ordering an immediate blockade of the Strait of Hormuz effective 10am New York time Monday
• Iran has described the blockade as 'amounting to piracy'
• UK Prime Minister Sir Keir Starmer announced the UK and France will co-host a summit this week on a coordinated multinational plan to protect Strait of Hormuz shipping when the conflict ends
• Russia has indicated readiness to accept Iran's enriched uranium as part of any peace deal

Key risks ahead:

• Downside risks dominate. The Hormuz blockade and surging oil prices create significant headwinds given the UK's vulnerability to energy shocks — if elevated prices persist, the BoE may be forced to maintain a more hawkish stance, weighing on growth-sensitive sterling
• Tuesday's US PPI is likely to show continued price pressures, which could add further to dollar strength and cap GBPUSD off the March highs
• Thursday's UK production data will be critical in assessing domestic economic momentum
• Conversely, any signs of de-escalation could trigger a sharp relief rally for the pair

Underlying trend:

Neutral to slightly bullish. The pair climbed for a third consecutive day on Wednesday, reaching the highest level since February 27.

Factors in price action:

• The US-Iran ceasefire announcement drove a 1% rally in sterling on Wednesday, with the pound surging as the Bloomberg Dollar Spot Index erased its 2026 gain. The pair broke the 2026 downtrend.
• Signs of fragility in any truce has limited the upside break
• US core capital goods orders rose 0.6% in February (released Tuesday), suggesting companies were moving forward on investment plans before the Iran war

Key data ahead (Thu–Fri):

• Thursday: US personal income and spending (Feb), PCE inflation (headline 2.8% YoY, core 3.1% YoY prior), jobless claims (202k prior), and Q4 GDP third estimate (0.7% prior)
• Friday: US CPI (headline 2.4% YoY, core 2.5% YoY prior), University of Michigan sentiment (53.3 prior), factory orders, and durable goods final readings

Middle East developments:

The fragile two-week ceasefire has already shown cracks, with Iran accusing the US of breaching the agreement and oil prices rebounding modestly

Key risks ahead:

• Ceasefire breakdown would likely push cable lower as safe-haven dollar demand returns and UK energy concerns resurface
• Hotter US inflation data (particularly Friday's CPI) could support the dollar and pressure the pair lower

Underlying trend:

Consolidating after failed downside break; bouncing off the Dec 2025 support

Factors in price action:

• Dollar weakened on Monday-Tuesday as ceasefire hopes emerged, with the Bloomberg Dollar Spot Index falling 0.2% to fresh session lows
• Sterling gained 0.3% against the greenback, as risk sentiment improved modestly
• Friday's blockbuster US jobs report (178,000 payrolls vs 59,000 expected, unemployment falling to 4.3%) eliminated Fed rate cut expectations for 2026, providing underlying dollar support
• Safe-haven demand for USD remained elevated ahead of Trump's Iran deadline, creating two-way volatility

Key data ahead (Tue–Fri):

• Tuesday: US Durable Goods Orders (Feb preliminary); UK Services PMI 51.2, Composite 50.8
• Wednesday: US MBA Mortgage Applications; UK Construction PMI 44.0
• Thursday: US Core PCE (0.4% MoM, 3.0% YoY — Fed's preferred inflation gauge); Personal Income/Spending; Initial Jobless Claims (202k prior); Q4 GDP revision (0.7%); UK RICS House Price Balance
• Friday: US CPI (1.0% MoM, 3.4% YoY — sharp acceleration expected due to energy prices); University of Michigan Sentiment
• Middle East: Trump's Tuesday deadline for Iran; potential for major escalation if no deal reached

Key risks ahead:

• Binary geopolitical risk: Iran deadline expiry could trigger sharp USD strength if conflict escalates; successful ceasefire would likely see cable rally
• Friday's US CPI is critical — consensus 1.0% MoM would be sharpest jump in months, reinforcing no-cut Fed stance and supporting USD
• Thursday's Core PCE at 3.0% YoY (vs 3.1% prior) may offer limited relief; focus on MoM momentum
• UK data relatively light; sterling vulnerable to external shocks rather than domestic drivers

Most likely direction:

Downside bias toward the Dec 2025 support if Iran tensions escalate and US inflation prints hot; upside capped at the 2nd April high unless ceasefire achieved

Underlying trend:

Sterling has rebounded over the past two days, recovering from recent weakness. The pair is showing modest upward momentum driven primarily by broad dollar weakness rather than sterling strength.

Factors in price action:

• Iran war de-escalation hopes: President Trump said the US could exit the Iran war within two to three weeks, triggering dollar weakness and sending oil prices below $100 per barrel.
• Energy relief for UK: Falling energy prices led to a sharp rally in UK government bonds, with money markets reducing Bank of England rate hike expectations to around 50 basis points by year-end.
• BOE pushback on rate hikes: Governor Bailey said markets are 'getting ahead of themselves' on pricing rate rises, tempering sterling gains.
• UK economic fragility: Manufacturing data showed the worst supply chain stress since 2022, with output contracting for the first time in six months. The Bank of England warned of risks of 'large, frequent and potentially overlapping shocks.'

Key data ahead (Thu–Fri):

• Thursday: US trade balance expected to widen to -$59.4 billion in February. Weekly jobless claims forecast at 212,000, up slightly from 210,000, with continuing claims rising to 1.833 million.
• Friday: Major US employment report expected to show 60,000 jobs added in March, a significant improvement from February's -92,000 decline. Unemployment rate forecast to hold at 4.4%. Eurozone industrial production expected to decline 0.1% month-on-month in February after a 0.5% gain previously.
• Middle East developments: Near-term direction hinges on whether de-escalation holds. A genuine ceasefire would benefit GBPUSD

Key risks ahead:

• Downside risks for sterling: If Friday's US jobs data beats expectations significantly, the dollar could regain strength and reverse recent losses. UK economic vulnerabilities remain, with energy shocks and weak manufacturing suggesting limited upside for the pound.
• Middle East uncertainty: Will tensions re-escalate? Safe-haven dollar demand could return quickly, pressuring sterling lower.

Most likely direction (Thu–Fri):

Modest consolidation or slight upside bias for sterling if Iran de-escalation continues and US data comes in soft. However, the pair remains vulnerable to reversal given UK economic fragility and potential for dollar safe-haven flows to resume.

Underlying trend:

Dollar strength prevailing as geopolitical risk and energy price surge support safe-haven demand. Pound vulnerable to stagflation concerns.

Factors in price action:

Iran war keeping dollar bid as markets brace for prolonged conflict. Every 10% oil price increase provides 0.5-1.0% dollar boost. UK exposed to energy shock as well as growth concerns.

This week (Mon–Fri preview):

• Monday, March 30: Fed Chair Powell speaks at Harvard (10:30 AM ET). Light data calendar.
• Tuesday, March 31: UK GDP figures - critical for assessing Britain's economic resilience and pound outlook.
• Thursday, April 2: US Retail Sales data will test consumer strength.
• Friday, April 3: US March Jobs Report - the week's critical release. Non-Farm Payrolls and Unemployment Rate will signal job market resilience amid geopolitical uncertainty.

Key risks ahead:

• Strong US jobs data Friday would reinforce dollar strength and push the pair lower.
• Weak UK GDP Wednesday could accelerate pound weakness.
• Main upside risk is Middle East de-escalation, which would reduce safe-haven dollar demand.
• Fed speakers may signal tolerance for higher inflation, potentially capping dollar gains.

Underlying trend:

Upward trend following the hawkish BoE pivot on Thursday 19 March, with sterling posting the strongest performance against the dollar among 14 major currencies — rising 1.14% and gaining 1.31% to reach its highest level since 9 March — despite ongoing resistance from resilient dollar strength

Trend bias:

• Upward trend following hawkish BoE pivot on Thursday 19 March, though facing resistance from resilient dollar strength
• The pound registered the best performance against the dollar among 14 major currencies on Thursday, strengthening 1.14%
• Sterling gained 1.31% on Thursday to reach its highest level since 9 March

Factors in price action:

• BoE held rates and signalled it 'stands ready to act' against inflation surge triggered by Middle East conflict, fueling bets on a rate hike as soon as April
• Money markets now price 63 basis points of BoE hikes by year-end following Thursday's decision
• Traders remain bearish on the pound despite hawkish BoE messaging, with one-month risk reversals hovering around the most bearish level since January 2025
• UK economy unexpectedly stalled in January, weighing on sentiment earlier in the week
• Broader dollar strength driven by elevated oil prices and geopolitical tensions limiting GBP upside

This week (Mon–Fri preview):

• Monday: Light US data with Chicago Fed National Activity Index and Construction Spending; EUR Consumer Confidence expected to weaken to -14.6
• Tuesday: Major PMI releases - UK Services PMI forecast to soften to 53.0 from 53.9, Manufacturing to 51.0 from 51.7; Eurozone and US PMIs also due
• Wednesday: Critical UK inflation data - CPI expected to hold at 3.0% YoY with Core at 3.1%; German IFO indicators anticipated to weaken; US Current Account Balance
• Thursday: Eurozone confidence indicators and M3 Money Supply; US weekly jobless claims expected at 205k
• Friday: UK Retail Sales forecast to cool (MoM from 1.8% to 0.2%, YoY from 4.5% to 2.6%); UK Consumer Confidence expected to deteriorate sharply from -19 to -25

Key risks ahead:

• GBPUSD downside risks: Weaker UK inflation data could reduce BoE hawkish stance; sharp deterioration in consumer confidence and retail sales may signal economic softening; PMI contraction in services would be concerning; options positioning remains bearish despite hawkish BoE
• GBPUSD upside risks: Sticky UK inflation maintaining BoE rate hike expectations; stronger UK PMIs relative to peers; further hawkish BoE commentary

Most likely direction:

Mixed to mildly lower - while hawkish BoE repricing provides support, the boost from higher rates is set to falter as negative economic consequences are digested; broader dollar strength and geopolitical tensions may cap gains

Underlying trend:

Bearish pressure with heightened volatility around central bank decisions

Factors in price action:

• Surging energy prices following damage to the world's largest liquefied natural gas export plant driving repricing of BOE rate expectations
• Hot US PPI data fuelling Fed hawkish repricing
• UK economy unexpectedly stalled in January, weighing on sterling
• Market repricing from rate cut expectations to over 38 basis points of BOE tightening by year-end
• Fed signalled only one cut in hawkish hold, supporting dollar strength

This week (Thurs–Fri preview):

• BOE decision expected at noon UK time Thursday, widely seen on hold at 3.75%
• Dovish dissents in favor of cuts would clash with market pricing for tightening and likely pressure sterling
• UK jobs data showed payrolls rose 20,000 in February versus expected 10,000 decline, providing modest support

Key risks ahead:

• Downside risks dominate: political instability and weak macroeconomic climate threaten sterling
• Long-term options sentiment hit most bearish in a year
• BoE's reaction function to inflation versus growth concerns will dictate near-term direction

Most likely direction:

Further weakness if BOE disappoints hawkish expectations or signals dovish bias

Underlying trend:

Bearish. Cable has declined since late February, reaching its lowest level since early December on March 13.

Factors in price action:

• Dollar strength driven by US position as top oil producer and greenback's role in global crude trade
• UK economy unexpectedly stalled in January, with growth already stagnant heading into the Iran conflict
• Traders most bearish on sterling in three-and-a-half years
• Thin liquidity and positioning washouts amplifying moves

This week (Mon–Fri preview):

• BoE decision March 19: expected to hold but had been expected to cut in support of weak economy
• Fed meeting March 17-18: expected to hold and reaffirm wait-and-see stance
• Oil price movements critical for inflation outlook and BoE easing timeline
• Central banks expected in 'wait and see' mode while signalling readiness to address inflation risks

Key risks ahead:

Stagflation risks from stagnant growth and renewed inflation pose downside risks. Middle East conflict escalation could drive further dollar strength. BoE dovish signals despite hawkish market pricing could pressure sterling. Continued thin liquidity may exacerbate volatility.

Most likely direction:

Further downside pressure on cable

Underlying trend:

Consolidation within longer term downtrend with GBP finding resistance

Factors in price action:

• USD weakness early in the week reversed modestly after February US CPI came in as expected, keeping inflation pressures contained but Treasury yields higher.
• Geopolitical headlines — potential talks to resolve US-Iran tensions — and IEA intervention easing oil prices contributed to softer energy-driven USD demand.

This week (Thu–Fri preview):

• GBP: Industrial Production, Manufacturing Production, Trade Balance (Jan) — focus on growth resilience vs fiscal/political pressures.
• USD: Core PCE, PCE, Durable Goods, GDP price data — these will guide Fed expectations and USD flow.

Key risks ahead:

• US economic surprises → USD support → GBPUSD lower.
• Softer UK data → GBP pressure.
• Risk sentiment shifts driven by Middle East and energy prices.

Underlying trend:

Soft-to-neutral — GBP supported by hawkish repricing in BoE expectations and rising yields, but constrained by ongoing geopolitical and energy risks; USD remains firm on safe-haven flows and elevated oil prices.

Factors in price action:

• GBP benefited from stronger-than-expected UK yields and market repricing of BoE rate cuts, but gains were capped by broader risk-off sentiment amid Middle East tensions.
• USD rallied midweek on Iran-related conflict fears, surging Brent crude, and firm US ISM data, reinforcing the safe-haven bid. Weak US payrolls were largely ignored.
• EUR underperformed as Europe remains sensitive to energy-driven inflation and growth risks, with elevated oil and gas prices keeping pressure on the ECB's policy outlook.

This week (Mon–Fri preview):

• UK: Industrial production, manufacturing output, trade balance (Jan) — may influence GBP but secondary to geopolitical flows.
• US: Core PCE, GDP, durable goods, personal income/spending, JOLTS, University of Michigan sentiment — key for Fed guidance and USD direction.
• Eurozone: French and German CPI, German factory orders — track inflation and growth pressures for EUR.
• Japan: GDP revisions and money supply — likely muted impact versus global risk flows.

Key risks ahead:

• Geopolitical tensions → USD safe-haven flows → GBPUSD pressured.
• Rising oil/gas prices → inflation risk → USD supported, EUR/GBP under pressure.
• UK yields and BoE guidance → potential GBP support, but capped by risk-off environment.

Underlying trend:

Lower — GBP pressured by geopolitical and energy-driven risk, and fragile UK political conditions; USD continues to benefit from energy-driven inflation risk, rising U.S. yields, and geopolitical uncertainty

Factors in price action:

• GBP remained under pressure early in the week as BoE's Alan Taylor highlighted economic fragility and cautioned against overreacting to energy shocks, reinforcing stagflation concerns. Political and energy risks continued to weigh on sterling.
• USD rallied strongly on renewed Iran tensions, surging oil prices, and upside US ISM data (manufacturing and services), with safe-haven flows supporting the greenback.

This week (Thu–Fri preview):

• UK: No major UK releases; markets remain sensitive to political and energy headlines.
• US: Continuing claims, initial jobless claims, import prices (Thu); nonfarm payrolls, unemployment, retail sales, and manufacturing payrolls (Fri) — key drivers for USD direction.

Key risks ahead:

• Strong US payrolls or retail data → USD firm → GBPUSD lower.
• Energy or geopolitical developments → volatility in both GBP and USD.
• GBP remains sensitive to political headlines and BoE commentary.

Underlying trend:

Soft — GBP under pressure from political risk and dovish BoE expectations; USD supported by risk-off sentiment and resilient US data.

Factors in price action:

• USD firmed through the week amid geopolitical risk, rising oil prices, and stronger-than-expected US data (durable goods, industrial production, jobless claims, Philadelphia Fed survey). Gains faded into Friday after the Supreme Court struck down Trump's tariff regime, reducing a major US policy overhang.
• GBP softened early on weak CPI and dovish BoE commentary but stabilised later with stronger UK PMIs and moderate easing expectations. Political risk from the Gorton and Denton by-elections capped GBP gains.

This week (2–6 Mar):

• UK: Political risk remains central after by-election results; domestic PMIs provide insight into activity, but headline drivers are political and BoE commentary.
• US: February nonfarm payrolls, unemployment, and retail sales — focus on confirming Fed inflation expectations and labour market resilience.

Key risks ahead:

• Softer UK political or economic data → GBP pressured vs USD
• Strong US labour or retail data → USD firm → GBPUSD lower.
• Geopolitical risk or risk-off sentiment → USD safe-haven flows → GBPUSD capped.

Underlying trend:

Soft — GBP faces pressure from dovish BoE expectations and political uncertainty; USD supported by solid US data and risk-off sentiment.

Factors in price action:

• GBP remained sensitive to dovish BoE signals, ongoing political risk around Gorton & Denton by-elections, and lingering market caution from recent CPI and labour data.
• USD retains structural support after last week's strong US activity and elevated geopolitical risks, though tariffs uncertainty continues to weigh on sentiment.

This week (23–27 Feb):

• UK: Political risk around Gorton & Denton by-elections; potential fiscal slippage could impact GBP.
• US: Durable goods, factory orders, consumer confidence, regional Fed surveys, weekly jobless claims, and Friday PPI — key for Fed guidance and USD direction.

Key risks ahead:

• Softer UK political/fiscal news → GBP under pressure.
• Strong US releases → USD firm → GBPUSD lower.
• Technical support levels from early 2026 could amplify moves if broken.

Underlying trend:

Soft — GBP pressured by dovish BoE signals and weaker labour data; USD firm on strong US activity and risk-off sentiment.

Factors in price action:

• GBP softened as BoE commentary highlighted a 'sluggish' economy, fueling expectations of an early rate cut. Weak UK jobs and CPI prospects reinforced the dovish case.
• USD rallied on risk-off sentiment, strong US durable goods, housing, and industrial data, reversing early losses and supporting safe-haven flows.

This week (Thu–Fri preview):

• UK: Retail sales (Ex/Inc Auto Fuel) and S&P Global PMIs — softer readings could reinforce BoE easing expectations.
• US: Core PCE, 4Q GDP, Personal Spending/Income, and S&P Global PMIs — key for Fed guidance and USD direction.

Key risks ahead:

• Softer UK data → GBP further pressured.
• Strong US economic releases → USD firm → GBPUSD lower.
• GBPUSD trading near the November uptrend support area

Underlying trend:

Neutral-to-soft — GBP has seen relief from reduced political risk, but USD strength post-payrolls limits GBP gains.

Factors in price action (Mon–Wed):

• GBP: Cabinet unity behind PM Keir Starmer trimmed the political risk premium, giving GBP some relief on Monday. Gains were modest as markets await Q4 GDP and ongoing labour-market signals.
• USD: Fell for three consecutive sessions through Tuesday amid disappointing December retail sales and weaker-than-expected payroll guidance, then rebounded Wednesday after an unexpectedly strong January nonfarm payrolls report (+130k) and a lower unemployment rate, pushing the market to price Fed cuts later (June → July).
• Treasury yields followed a similar pattern: lower early in the week, rising post-payrolls, providing USD support.

This week (Thu–Fri preview):

• UK: Q4 GDP (Thu) — expected soft end to 2025, with early 2026 recovery possible as budget uncertainty fades. Key risk remains a fragile job market and political headlines.
• US: Jan CPI (Fri) — main focus for Fed guidance; will set near-term USD tone.
• Eurozone: Trade data (Fri) — ongoing impact of US tariffs and Chinese shipment diversion could influence broader risk sentiment.

Key risks ahead:

• UK GDP weaker than expected → GBP downside pressure.
• Strong US CPI → USD supported → GBPUSD lower.
• Continued political stability → limits GBP downside, allows temporary rallies.
• Eurozone trade surprises → indirect risk-on/off influence via EURUSD moves.

Underlying trend:

Soft — GBP remains under pressure from political uncertainty and dovish BoE messaging, while USD gains from resilient US activity and higher yields.

Factors in price action:

• Last week, USD firmed after the ISM manufacturing upside surprise, strong ADP, and higher US yields.
• GBP fell sharply after the BoE's 5–4 hold vote, dovish forecasts, and heightened political uncertainty following the Mandelson controversy and looming elections.
• Options markets signal strong positioning against GBP, particularly vs USD.

This week (9–13 Feb):

• UK: Q4 GDP release expected to show a soft end to 2025; early 2026 may see modest recovery as budget uncertainty fades.
• US: Wed: Jan Jobs Report (delayed) — nonfarm payrolls ~70k, unemployment ~4.4%. Fri: Jan CPI — key gauge for Fed guidance.
• Risk tone also influenced by UK political headlines and broader market positioning.

Key risks ahead:

• Weaker-than-expected UK GDP → reinforces GBP downside → GBPUSD lower.
• Political uncertainty → GBP underperformance.
• Strong US payrolls or sticky CPI → USD firm → GBPUSD lower.

Underlying trend:

Neutral-to-slightly softer — USD has stabilised after an aggressive selloff, while GBP upside looks capped ahead of BoE risk.

Factors in price action:

• USD sold off sharply early last week on trade tensions, US political risk, shutdown fears and renewed FX intervention speculation involving Japan, pushing USD index to multi-year lows.
• JPY strength led the move, dragging USD/JPY sharply lower and lifting EURUSD and GBPUSD to multi-year highs.
• The latter half of the week saw a corrective USD rebound, driven by position unwinds, month-end flows, firmer US PPI and a hawkish signal from Trump's nomination of Kevin Warsh as Fed Chair.
• GBP benefited from broad USD weakness but faded late week as USD stabilised and rates repriced modestly higher.

This week (2–6 Feb):

• UK — BoE policy decision: rates expected unchanged at 3.75% with a split vote.
• UK — Updated forecasts likely show inflation nearing target by mid-2026, but a cooling jobs market argues for caution.
• US — December JOLTS openings expected to rebound modestly, but hiring signals remain mixed.
• US — Jan nonfarm payrolls: growth seen around 65k, unemployment rate holding at 4.4%.
• US — ISM manufacturing may tick up but still points to contraction and easing price pressures.

Key risks ahead:

• Dovish BoE tone or split vote leaning softer → GBPUSD lower.
• Weak US payrolls / soft labour signals → USD selling resumes → GBPUSD supported.
• Further USD stabilisation on rates repricing → caps GBP upside.

Underlying trend:

Mixed — GBP fundamentals improve and USD influenced by geopolitics

Factors in price action:

• Improved data from the UK saw hawkish repricing on rate expectations supporting GBP further.
• USD has weakened broadly amid speculation the US may coordinate with Japan on FX intervention to support JPY, dragging USD to its lowest level since September.

This week (26–30 Jan):

• UK: Quiet calendar; focus remains on growth narrative and BoE expectations.
• US: Fed meeting the highlight with rate expected to be unchanged

Key risks ahead:

• Stabilisation in USD/JPY or pushback on intervention talk → USD rebounds → GBPUSD lower.
• Continued FX-intervention speculation + weak US data → USD softness persists → GBPUSD supported.
• Escalation in trade or geopolitical risk → volatility rises, GBP likely underperforms defensively.

Underlying trend:

Soft — GBP remains on the back foot amid weak domestic momentum and elevated global political risk.

Factors in price action:

• UK growth concerns persist, keeping markets biased toward further BoE easing later in the year.
• GBP struggles to attract inflows as fiscal and demand uncertainty linger.
• USD supported by safe-haven demand following renewed Trump tariff threats on the EU linked to Greenland, adding to geopolitical risk premia.
• Markets remain sensitive to rates volatility and global trade tensions

This week (19–23 Jan):

• UK: Job market data (Tue) and inflation (Wed) all in focus this week and whether we see more dovish pricing on BoE rates
• US: Core PCE inflation numbers (Thur) expected to show firm but easing inflation – may not move the needle too much
• Trade rhetoric and political headlines remain an ongoing volatility risk.

Key risks ahead:

• Weak UK job and inflation data → reinforces easing bias → GBPUSD lower.
• Escalation in trade tensions → USD safe-haven bid → GBP underperforms.
• Dovish Fed rhetoric or softer US data → USD eases → GBPUSD stabilises.

Underlying trend:

Rangebound — Both currencies struggle to find clear direction.

Factors in price action:

• UK growth momentum remains fragile, keeping the BoE firmly biased toward further easing later this year.
• USD direction dominated by US inflation data, which will shape how aggressively markets price further Fed cuts.
• USD demand clouded by 'Sell America' theme returning.

This week (12–16 Jan):

• UK: Monthly GDP and industrial production for November; growth expected to remain subdued.
• US: December CPI is the main event — markets focused on services inflation and shelter components.
• Fed speakers throughout the week provide colour but unlikely to materially shift guidance.

Key risks ahead:

• US CPI downside surprise → USD softens → GBPUSD stabilises or lifts.
• Sticky US services inflation → USD firmer → GBPUSD lower.
• Weak UK GDP reinforces easing narrative → GBP underperforms.

Trend bias:

Cautiously soft — GBP starts the year on the back foot as growth concerns linger and USD sets the early-January tone.

Factors in price action:

• Early-year positioning and USD buying driving near-term moves.
• UK macro momentum remains weak, with the job market and demand outlook still fragile.
• Markets remain sensitive to Fed expectations after December cut, with job conditions still the key driver.
• Thin liquidity exaggerates moves early in the week.

This week (5–9 Jan):

• UK: UK service PMI to gauge growth momentum.
• US: ISM services and December job numbers towards the end of the week will set the tone for USD. Fed speakers return, though unlikely to materially shift near-term pricing.

Key risks ahead:

• Strong US payrolls or steady unemployment → USD firmer → GBPUSD lower.
• Softer job data → USD pullback → GBPUSD stabilises.
• Any renewed UK growth concerns → GBP should perform well.

Trend bias:

Downside bias — GBP vulnerable into a likely BoE cut, while USD direction hinges on job data.

Factors in price action:

• UK job data and CPI will shape expectations into Thursday's BoE meeting, where a 25 bp cut is expected.
• Softer wages and employment are anticipated, reinforcing the easing bias.
• USD direction dominated by the November jobs report, with the unemployment rate the key market driver.
• Fed focus remains squarely on job conditions rather than inflation.

This week:

• Tue: UK job market data (wages/employment); US nonfarm payrolls (Nov).
• Wed: UK CPI; multiple Fed speakers.
• Thu: BoE rate decision (25 bp cut expected); US jobless claims and US CPI
• Fri: UK public finances, retail sales, consumer confidence; US existing home sales.

Key risks ahead:

• Softer UK job data → reinforces BoE cut → GBPUSD lower.
• UK CPI upside surprise → challenges easing expectations → GBP short-cover.
• Weak US payrolls / higher unemployment → USD softens → GBPUSD stabilises.
• Strong job resilience in the US → USD firmer → GBPUSD pressured.

Trend bias:

Soft-to-choppy — GBP still lagging on weak domestic momentum, while USD trades event-heavy into the 10 December FOMC.

Factors in price action:

• Markets focused in on what the Fed policy will be in a post Powell Federal Reserve, with likely successor to be a dove, causing a broad weaker USD
• GBP was boosted after services PMI's were revised higher for November's final numbers

This week:

• UK — Jobs Report (REC/KPMG): labour market still weak; hiring intentions in focus.
• UK — Monthly GDP (Oct) expected +0.1%; consumption trends still soft.
• UK — Bailey + multiple BoE MPC appearances; Reeves questioned by Parliament.
• US — FOMC (Dec 10): expected 25 bp cut but Powell likely keeps January as a live meeting.
• US — Weekly jobless claims (Thu) remain important for trend confirmation.

Key risks ahead:

• Hawkish Powell guidance → GBPUSD lower.
• Another soft UK labour print → adds downside for GBP.
• Softer US labour and a dovish Fed → supports GBPUSD rebound.

Trend bias:

GBP rally to be faded

Factors in price action:

• Fed leaning toward a 25 bp cut on 10 Dec, with last week's weak Beige Book labour signals doing the heavy lifting.
• Possible appointment of Kevin Hassett as next Fed Chair emboldened dovish pricing on Fed rates
• GBP goes through relief rally with the Autumn Budget taken in the market's stride and bond markets being appeased.

This week (1–5 Dec):

• US: ISM manufacturing & services (mixed expected), ADP, jobless claims.
• Data remains outdated → limited impact on Fed expectations.
• UK: Light calendar; GBP follows USD and global sentiment.

Key risks ahead:

• Firmer ISM or cleaner US data → USD firmer, GBPUSD lower.
• Fed-cut expectations build → softer USD, GBPUSD stabilises.
• Risk-off environment favours USD → GBPUSD pressured.

Trend bias:

Downside tilt — GBP still feels heavy with fiscal uncertainty and soft domestic demand keeping rallies shallow.

Factors in price action:

• UK fiscal credibility remains the central theme as markets wait for clarity ahead of the Autumn Statement.
• GBP continues to underperform on weak demand indicators and cautious BoE communication.
• USD remains the global driver this week, with delayed US macro data feeding volatility and month-end positioning.

This week (24–28 Nov):

• Budget focus: Chancellor Rachel Reeves faces a major credibility test — with income-tax hikes reportedly ruled out, reliance on smaller revenue measures may not fully reassure markets.
• US: Ongoing delayed data releases: September retail sales, PPI, November ADP, Conference Board confidence, and jobless claims.
• US Markets closed Thursday for Thanksgiving.

Key risks ahead:

• Lack of convincing fiscal measures from Reeves → GBP remains pressured.
• Strong firmer delayed US data → USD re-strengthens, GBPUSD lower.

Our view:

GBPUSD trades vulnerable going into budget backdrop and the fallout will likely determine future direction of the pair

Trend bias:

Downside bias still intact — GBP rallies remain shallow with macro data and fiscal uncertainty weighing.

Factors in price action:

• GBP remains weak after soft UK labour and GDP data last week.
• UK Budget uncertainty is adding an extra layer of caution — markets are wary the Autumn Statement may underline weak fiscal space and sluggish growth.
• USD strength since September keeps GBPUSD sensitive to any pickup in dollar volatility this week.

This week:

• UK headline CPI (Oct) expected to slow — confirming inflation has peaked, though the descent may be slower than the BoE hopes.
• UK Flash PMI offers the first look at Q4 momentum.
• US: Nonfarm payrolls released Thu 20 Nov — despite being backward-looking, still a major volatility risk.
• Fiscal noise will continue ahead of the UK Autumn Statement.

Key risks ahead:

• A soft UK CPI print + weak PMIs + fiscal uncertainty = a bearish GBP cocktail.
• Heightened UK Budget speculation could weigh further if spending plans or growth forecasts disappoint.
• NFP downside surprise could trigger USD selling and give GBPUSD some relief.
• A strong jobs report risks reigniting USD strength and sending GBPUSD lower.

Our view:

GBPUSD trades vulnerable into UK CPI and the budget backdrop. NFPs are the swing factor — unless US data triggers USD selling, the pair risks grinding lower.

Trend bias:

Downside tilt remains — sterling vulnerable into event risk, but short-covering is possible if prints surprise to the upside.

Factors in price action:

GBP was weak going into last week's BoE meeting on speculation that there could have been a surprise rate cut. No rate cut meant that markets covered their GBP shorts and we saw a rebound on the pair but nonetheless the pair remains in its September downtrend.

This week:

• GBP: Job numbers and then 3rd quarter growth numbers will be the focus this week as we gauge how the economy is doing. Soft numbers will likely add pressure back on GBP as well as continue to mount pressure on Chancellor Rachel Reeves ahead of her budget on November 26th
• USD: Waiting to see if US government shutdown is going to end which could then allow for key CPI and job data

Key risks / scenarios:

Unless we get the release of any US data this week then the UK data points will take precedence. Solid job numbers and growth numbers and the rebound for GBP will likely continue within its 2 month downtrend. Also should the government shutdown end, then a rise in risk appetite could also lift the pair

Trend bias:

Still tilted lower — GBP remains under pressure unless there's a clear positive catalyst. USD holds up given safe-haven flows and policy uncertainty.

Factors in price action:

• GBP declined with inflationary pressures easing raising the odds of a rate cut in December as well as the OBR downgrading productivity forecasts for the UK.
• USD firmed up following hawkish rate cut last week which eased the number of rate cuts expected by the Fed over the next 12 months.

This week (3–7 Nov):

The Bank of England will be in focus on Thursday with the latest interest rate decision as well as their Monetary Policy which will include updated growth/inflation forecasts for the UK. The BoE are not currently expected to cut rates this month, however, there has been calls from Goldman Sachs and Barclays that the BoE could well cut in this meeting. In light of the upcoming budget and recent CPI numbers, there is a good possibility that this meeting could be seen as dovish

Key risks ahead:

• If the BoE signals more dovishness, GBPUSD could drop further with no clear support on the pair until the lows in April
• Conversely, if BoE holds firm (less dovish than expected) and risk sentiment improves, GBPUSD may rally but likely capped given underlying UK headwinds and the upcoming Budget

Trend bias:

Still skewed to the downside — sterling faces headwinds leading into the Autumn budget. A break below key support could open up further losses.

Factors in price action:

• Lower than expected CPI numbers added to rate cut bets from the BoE putting pressure on GBP
• USD demand in general picking up as markets ease the number of rate cuts over the next 12 months

This week (27–31 Oct):

• UK: With limited UK macro prints this week, GBP moves may be more sensitive to broad FX flows and external shock.
• US: Fed expected to cut rates by 25 bps on Wednesday which is fully priced in by markets. Language for future policy will be in focus as well as GDP numbers at the end of the week

Key risks ahead:

• A strong USD surprise from hawkish Fed comments might drag GBPUSD lower to test the October lows

Trend bias:

Bearish bias persists — GBP continues to struggle under domestic pressures, and USD may regain footing if risk aversion picks up.

Factors in price action:

• The spotlight this week shifts to UK inflation (CPI) — a hotter-than-expected print could offer GBP some relief, but a soft one would deepen downside.
• With the US still largely data-quiet (due to shutdown constraints), USD moves will be more about global sentiment, positioning, and capital flows than fresh macro surprises.
• Political and fiscal (UK) noise also matters — talk around energy VAT cuts or government measures could add surprises.

This week (20–24 Oct):

• UK: The key event is CPI inflation on Wednesday 22 Oct. Markets will closely watch both headline and core prints, plus the breakdown by services, energy, etc.
• Also, fiscal data (government receipts, borrowing) and retail / flash PMI data toward the end of the week may feed GBP moves.
• Global / Other: Flash PMIs across major economies on Friday will be in focus (incl. UK, Eurozone, US) to gauge global activity momentum.
• September's long awaited US CPI numbers are due on Friday.

Key risks ahead:

• A hot UK CPI or surprises in core inflation could give GBP a bounce, especially if it reshapes rate expectations.
• A weak inflation print (or signs of disinflation) would reinforce dovish expectations for the BoE and intensify GBP pressure.
• A USD resurgence on hot CPI would magnify GBPUSD downside.
• Unexpected fiscal announcements (energy VAT, stimulus) or data revisions might cause intraday shocks.

Trend bias:

Bearish bias remains intact — rally attempts have been capped, and the September low / support zone breached last week.

Factors in price action:

• Sterling remains under pressure amid weak UK fundamentals and political uncertainty.
• USD strength is bolstered by safe-haven flows amid global political noise (France PM resignation, Japan LDP twist) and diverging Fed expectations

This week (13–17 Oct):

• UK: The spotlight falls on the labour/employment report for September (jobs, wage growth) — a key input into BOE rate expectations.
• US: Very light on data this week — USD moves likely driven by external risk flows rather than fresh macro prints.

Key risks ahead:

• Strong wage growth or tight labour market data would push back against GBP weakness, possibly triggering a relief bounce toward resistance.
• Weak jobs numbers or indications of labour softening may accelerate downside pressure, with GBPUSD potentially revisiting the August and May low
• Any global risk event or geopolitical development that favours the USD could exacerbate sterling weakness.

Trend bias:

Consolidating following breakdown of the Aug – Sep uptrend.

Factors in price action:

Investor sentiment remains cautious amid ongoing concerns in the UK economy, with the service sector's growth hitting a five-month low in September. Additionally, the U.S. government shutdown has led to a delay in key economic data releases, contributing to market uncertainty resulting in USD weakness

This week:

• US: Fed minutes.

Key risks ahead:

• Delays in U.S. economic data releases may prolong market uncertainty and volatility.

Trend bias:

August downtrend still intact but support found on the August/July lows

Factors in price action:

Market sentiment on the UK remains negative with continued concerns of the UK economy which was illustrated by the worse than expected PMI numbers versus better than expected PMI numbers from Europe

This week:

• UK: Labour party conference.
• Eurozone: EU CPI

Key risks ahead:

• Markets will be listening out for any hints from Chancellor Rachel Reeves of what could be released in the Autumn budget.
• Given markets are firmly pricing in no more rate cuts by the ECB – sharp fall in CPI could spur on rate cut bets and weaken EUR

Trend bias:

Overall range-bound as markets weigh UK inflation surprises against weak domestic demand in the UK. US rate cut story all played out?

Factors in price action:

• UK's CPI came in hotter than expectation, tightening BOE rate-cut expectations.
• UK PSNB hit 5 year highs piling pressure on the Chancellor.
• USD fought back after Fed meeting suggesting perhaps have peaked pricing in Fed rate cuts

This week:

• UK: Composite/Services PMIs.
• US: GDP second estimate for Q2, Core PCE, and Fed officials speaking.

Key risks ahead:

• Strong US inflation or employment data → USD strength and could see September lows tested.
• If UK data surprises with strength, GBP could test prior resistance.

Trend bias:

Pair finished unchanged last week, continuing its rangebound trend

Factors in price action:

UK long term debt yields spiking to 1998 highs, drew concern for UK seeing initial selling on GBP but then countered by weak job numbers seeing weaker USD

This week:

• UK: GDP for July
• US: Inflation numbers in the form of PPI and CPI

Key risks ahead:

With underlying concerns of UK economy still simmering in the background, a lower-than-expected growth number could put pressure on GBP. A weaker inflation number to add to the disappointing job numbers last week could pile further pressure on USD as well.

Trend bias:

Sideways, consolidating within a tight range.

Factors in price action:

• GBP on the backfoot on continued concerns about brewing stagflation in the economy as well as fiscal concerns that could arise in the upcoming Autumn Budget
• USD undermined by rate cut expectations – more expected by the Fed than by the BoE this year.

This week:

All about US job numbers this week culminating in the nonfarm payroll print and unemployment rate on Friday

Key risks ahead:

Strong US job numbers should ease off rate cut expectations following last month's lower revisions as well as boosting sentiment about the US economy. If so GBPUSD should trade towards the lower end of its trading range. A disappointment and a test of the July and August highs seems likely

Trend bias:

Mild upside bias, but still range-bound. USD weakness post-Powell underpins the pair, though upside capped by stretched positioning.

Factors in price action:

Last week's UK CPI overshoot firmed GBP, with markets scaling back rate cut expectations. Meanwhile, Powell's Jackson Hole tone reinforced market conviction in a Fed September cut.

This week:

• US: Core PCE (Fri) the highlight, could revive dollar strength if it surprises to the upside

Key risks:

• Stronger US data (PCE, jobless claims) could reignite USD demand.

Trend bias:

Mild upside potential, but rangebound trade likely until key UK and US data.

Factors in price action:

Sterling remains supported by expectations that BOE will tread cautiously on further cuts. Momentum is capped as the USD still benefits from safe-haven demand and Fed-watch dynamics.

This week:

• UK: CPI (Wed), Flash PMIs (Thu), Retail Sales (Fri) — pivotal for BOE rate outlook.
• US: FOMC minutes (Wed), jobless claims & PMIs (Thu), Powell at Jackson Hole (Fri).

Key risks ahead:

• GBP: Hot CPI or stronger retail sales could delay BOE easing and lift GBP.
• USD: Hawkish Powell or firmer US data may put GBP/USD back under pressure.

Trend bias:

GBPEUR remains rangebound, but the balance of risks is tilted to the downside for sterling.

Factors in price action:

• Last week's UK GDP beat gave the pound a short-term lift, but the bigger picture still points to a stagnating economy, cautious consumer sentiment, and uncertainty ahead of the autumn budget — all of which could limit upside potential.
• On the euro side, positioning remains constructive, with EUR still the preferred vehicle for USD bearish bets. While eurozone data has been mixed, steady ECB guidance is providing a stable backdrop. GBPEUR has bounced around 2% from year-to-date lows following the BoE's 'hawkish cut' and market repricing of UK rate expectations, but fundamental headwinds for GBP remain.

This week:

• UK data calendar is light; sterling will take cues from broader risk sentiment.
• Eurozone flash PMIs on Thursday are the key macro driver — softer numbers could weigh on EUR, but the bar for disappointment is relatively high.