British Pound Analysis: All Eyes on 1.2850 Support for GBP/USD
If the global economy is showing signs of downshifting, GBP/USD may be particularly vulnerable...
Share this:
GBP/USD Takeaways
- Traders are still evaluating yesterday’s UK CPI data and are increasingly skeptical of a 50bps rate hike from the BOE next month.
- GBP/USD is falling for its 5th straight day, losing nearly 300 pips over that period.
- 1.2850 support could lead to a bounce ahead of the weekend, but if that level gives way, a continuation to below 1.2700 could be at hand.
GBP/USD Fundamental Analysis
Sometimes, all it takes is a little time.
The UK economic calendar was absolutely barren today, but traders are nonetheless reevaluating their previous assumptions about how hawkish the Bank of England may be, especially in the wake of yesterday’s UK CPI report. Consumer prices in the UK rose “only” 7.9% y/y, well below the 8.2% reading expected, and the more predictive “core” inflation rate was only 6.9% vs. 7.1% anticipated.
Accordingly, traders are now pricing in a 25bps BOE rate hike in early August as the odds-on favorite and have taken their projection for the BOE’s terminal rate down nearly 75bps from the start of the month to below 6.00%.
Meanwhile, across the Atlantic, the greenback is benefitting from a surprise decline in initial unemployment claims to 228K this morning, though the Philly Fed and Existing Home Sales figures data came in slightly worse than expected. Ultimately, if the global economy is showing signs of downshifting, sterling may be far more vulnerable that the US dollar given the substantially higher expectations for additional rate hikes in the UK.
British Pound Technical Analysis – GBP/USD Daily Chart
Source: TradingView, StoneX
Looking at the chart, GBP/USD is working on its 5th consecutive down day, falling from previous-support-turned-resistance from the December 2021 lows at 1.3150 at this time last week down to test the mid-June highs near 1.2850 as we go to press.
Purely from a technical perspective, this is a logical area for GBP/USD bears to take profits ahead of the weekend, so a bounce back above 1.2900 could be in the cards ahead of the weekend. That said, if tomorrow’s UK retail sales report comes in lower than expected, GBP/USD could extend its losses, with room for a continuation down to trend line support under 1.2700 next week if the 1.2850 support level gives way.
One way or another, GBP/USD is a key short-term inflection point, so traders should keep a close eye on the price action over the next 24 hours for hints about what to expect next week.
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter: @MWellerFX
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD into a Massive Week as Yields Fly and Gold Breaks
It’s a huge week with PCE and NFP, but it’s what’s happening off of the calendar that demands attention with US yields flying to fresh multi-decade highs.
USDJPY Forecast Intervention Fears Clash with Dollar Strength
Recent trading sessions have produced mixed results for the Japanese yen. By the end of last week, USD/JPY had fallen by more than 1.00%, reflecting a modest recovery in the yen. However, the start of this week has seen the pair move slightly back in favor of the U.S. dollar, posting gains of around 0.04%.
AUD/USD forecast: Currency Pair of the Week | September 28, 2026
The week has started with stocks, gold, silver and bitcoin all falling, as crude oil rebounded and bond yields pushed further higher. Trump refusing to agree to Tehran’s proposal to re-open the Strait of Hormuz has left the markets disappointed. Still, reports that mediators are expected to hold talks with the two sides on an amended version of the 7-day proposal that Iran presented, keeps hopes alive that we may see some progress.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.