The British Pound (GBP) is retreating against the US Dollar (USD), with GBP/USD falling around 0.39% as stronger-than-expected US inflation data provides fresh support to the Greenback. The pair has slipped below 1.3600 after reaching a recent high near 1.3651.
The latest US Personal Consumption Expenditures (PCE) data showed headline inflation at 3.7% year over year in July, above the 3.6% market expectation. Monthly PCE increased 0.2%, while core PCE remained at 3.3% year over year. The figures have increased expectations that the Federal Reserve could raise interest rates later this year.
Market pricing for a 25-basis-point Fed hike at the September meeting rose to around 40.1%, up from approximately 36% before the inflation release. This shift has helped the US Dollar recover and has put pressure on major currencies, including Sterling.
GBP/USD Technical Outlook
Despite the pullback, the broader GBP/USD technical structure remains constructive. The pair continues to trade above a cluster of major moving averages around the 1.3410 region, while the Relative Strength Index remains near 60, indicating positive but not excessively stretched momentum.
The 1.3600 area is an important near-term level. Holding above this zone could allow Sterling to stabilize and attempt another move toward the recent 1.3650–1.3675 region. A sustained break below 1.3600, however, could increase the risk of a deeper correction.
Market Outlook
The immediate focus now shifts toward Federal Reserve policy signals and Fed Chair Kevin Warsh's upcoming Jackson Hole speech. Any hawkish guidance could further support the US Dollar, while a more dovish message could allow GBP/USD to recover.
For now, 1.3600 support and 1.3650–1.3675 resistance remain key levels to watch as traders assess the next move in GBP/USD.
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