GBP/USD Falls on USD Strength Ahead of FOMC Minutes
GBP/USD is falling, giving back yesterday’s gains and trading around 1.3250. The move lower comes as the U.S. dollar gains ground, supported by rising oil prices, which could revive inflation concerns, and expectations of further Fed rate hikes as traders look towards the FOMC meeting minutes due later today.
Following last week’s weaker-than-expected nonfarm payroll report, Fed rate hike expectations have shifted, with markets now pricing in just a 20% probability of a rate hike in October. However, the market remains convinced that the Fed will hike again before the end of the year.
Combined with elevated Treasury yields, with the 10-year yield back above 5.3%, this continues to support the U.S. dollar.
All eyes are now on today’s FOMC minutes, which refer to the September meeting when the Fed raised rates by 25 basis points. The market will be watching for further clues over the likelihood of another rate hike this year, as well as insight into how policymakers view elevated Treasury yields and whether they believe these are already tightening financial conditions, making further rate hikes less necessary.
The pound has fallen sharply against the stronger U.S. dollar in recent weeks and could also face pressure from rising UK inflation concerns.
BoE policymaker Catherine Mann warned that inflation above the 2% target appears to be becoming embedded in the economy and could reach 4% towards the end of the year, around the time when wage negotiations typically take place. Mann has voted for a 25-basis-point rate hike to 4% since July.
GBP/USD Forecast – Technical Analysis
After running into resistance at 1.3375, GBP/USD reversed lower, breaking below the 50- and 200-EMAs before finding support around 1.3200. The 50 EMA has also crossed below the 200 EMA, forming a death cross signal. Price is now consolidating above 1.3200, with gains capped around 1.3275.
Sellers will look to break below 1.3200 and 1.3150 to create a lower low, bringing 1.3100 into focus ahead of 1.3000, the psychological level.
Buyers will need to rise above 1.3275, the July 28 swing low, to bring 1.3340 into focus. Above here, attention turns to 1.3400, where the 50- and 200-EMAs converge.
Oil Prices Rise as Supply Concerns Return
Oil prices are rising on Wednesday, recovering from a monthly low in the previous session as supply concerns return. A storm is heading towards U.S. oil-producing regions, while Iran-backed Houthis have ramped up attacks on Saudi Arabia.
Forecasters are monitoring a storm forming in the Gulf of Mexico, which could become the first Atlantic hurricane of 2026 and potentially disrupt oil and gas production facilities. The affected regions account for around 15% of U.S. crude oil production and 5% of natural gas output.
U.S. crude oil inventories also fell by 2.09 million barrels last week, according to API data.
Meanwhile, supply from the Middle East has been recovering, with Saudi Arabia’s East-West pipeline reaching 5.8 million barrels per day. However, Saudi Arabia’s airports in Jazan and Najran were targeted in attacks amid ongoing hostilities between Saudi Arabia and Iran-backed Houthis.
U.S.-Iran relations also remain some distance from being repaired, with JD Vance insisting that Iran would need to cut nuclear enrichment to end the war — a move Tehran has said it will not make.
Without meaningful de-escalation in the Middle East, oil prices could remain around $100 a barrel, particularly given how low accessible inventories have become.
Governments and energy companies have drawn down stockpiles to alleviate supply pressure stemming from the Middle East conflict. The CEO of Saudi Arabia’s state oil company, Saudi Aramco, warned that less than 6 billion barrels of commercial inventories remain, with the vast majority not practically available. More than one million barrels of oil have been released from onshore commercial inventories since the start of the conflict.
The IEA has said it is preparing to release 100 million barrels of crude and diesel to help alleviate soaring oil prices. Oil industry executives have warned that market turmoil could continue beyond next year and that it could take years to rebuild inventories.
Oil Forecast – Technical Analysis
While trading within a rising channel, oil ran into resistance at $107.50 before reversing lower and is now finding support at the 50 EMA and the lower band of the rising channel.
Sellers will need to close below $90, where the 50 EMA and lower channel band converge, followed by $88, the 50% Fibonacci retracement of the $55 low to $120 high. A break below $88 would turn attention to the 200 EMA around $83.
Should current support around $90 hold, buyers will look to push higher towards $95, the 38.2% Fibonacci retracement, before attention turns to $100, the psychological level.
