GBP/USD Holds Near Seven-Month Lows as Markets Await US PCE Report

Traders' Opinions

Summary:

The British pound steadied after a sharp selloff as traders reduced long US dollar positions ahead of key US inflation data, though diverging monetary policy expectations continue to favor the greenback.

SELL GBPUSD

EXP

TRADING

1.31700

Entry Price

1.30000

1.33000

1.32009 +0.00333 +0.25%

0.0

Pips

Flat

1.30000

Exit Price

1.31700

Entry Price

1.33000

The British Pound edged higher against the US Dollar on Thursday, recovering modestly from seven-month lows as investors trimmed bullish Dollar positions ahead of the closely watched US Personal Consumption Expenditures (PCE) Price Index report. Despite the rebound from the 1.3140 area, GBP/USD remained below the 1.3200 handle, highlighting that broader bearish sentiment toward Sterling remains firmly intact.

The pair has fallen more than 1.6% over the past ten days as widening monetary policy divergence continues to favor the US Dollar. Stronger-than-expected US economic data and persistent inflation pressures have reinforced expectations that the Federal Reserve will keep policy restrictive for longer, with several officials adopting a more hawkish tone. In contrast, Bank of England policymakers have signaled little urgency to tighten policy further, leading markets to expect UK interest rates to remain largely unchanged well into 2027.

Attention now turns to the US PCE inflation report, the Federal Reserve's preferred inflation gauge. Markets expect headline PCE inflation to accelerate to 4.1% year-on-year in May from 3.8%, while core PCE is forecast to edge up to 3.4% from 3.3%. A stronger-than-expected reading would likely reinforce expectations for another Fed rate hike this year, providing fresh support for the Dollar and increasing downside risks for GBP/USD.

Political uncertainty in the United Kingdom is also limiting demand for Sterling. Although the resignation of Prime Minister Keir Starmer initially sparked a modest relief rally, investors remain cautious until greater clarity emerges over the next government's fiscal priorities and borrowing plans. The lack of political certainty continues to discourage aggressive bullish positioning in the Pound.

Technical Analysis

GBP/USD remains under bearish pressure on the 2-hour chart, with price trading near 1.3175 after failing to reclaim the key 1.3200 resistance zone. The pair has been trending lower since its rejection from the 1.3400 area, forming a clear sequence of lower highs and lower lows.

The latest price action shows sellers defending the 1.3190–1.3200 zone, which has now turned into immediate resistance. As long as GBP/USD remains below this level, the downside bias stays intact and short-term rebounds are likely to attract fresh selling interest.

On the downside, immediate support sits around 1.3150. A sustained break below this area would expose the next major target at 1.3000, which aligns with the projected bearish move on the chart. A deeper decline below 1.3000 would confirm a broader deterioration in market structure.

On the upside, GBP/USD would need to recover above 1.3200 to ease immediate selling pressure. A stronger move above 1.3300 would be required to invalidate the bearish setup and suggest that buyers are regaining control.

Momentum remains negative, with price consolidating near recent lows rather than showing a convincing recovery. This suggests the current pause is more likely continuation selling than a trend reversal.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3170

STOP LOSS: 1.3300

TAKE PROFIT : 1.3000

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education