The British pound held firm on Tuesday, with the GBP/USD pair trading around 1.3660, close to two-month highs. The move reflects broad weakness in the U.S. dollar as traders brace for fresh policy signals from the Federal Reserve.
The pair remains supported by technical momentum, even as mixed U.K. labor market data failed to shift sentiment. According to the Office for National Statistics, the ILO unemployment rate stayed at 4.7% in the three months to July, while wage growth excluding bonuses slowed slightly to 4.8% from 5%. The figures matched expectations but had little market impact.
Key Technical Levels to Watch
Sterling’s recent advance brings the pair into focus against notable resistance points. The 78.6% Fibonacci retracement of the latest downtrend sits at 1.3640, a level now serving as immediate support. A sustained break above this zone could pave the way for a test of higher thresholds.
Upside hurdles include:
- 1.3700 – psychological round level.
- 1.3770 – the starting point of the prior downtrend.
On the downside, traders are eyeing support at 1.3600, followed by 1.3540, the 61.8% retracement, and 1.3500, which aligns with the 100-period Simple Moving Average.
Market participants note that maintaining momentum above 1.3640 would strengthen the bullish case, while failure to hold may bring fresh pressure.
U.S. Dollar Remains Under Pressure
The dollar’s weakness is being driven by both domestic and global factors. Risk-on sentiment lifted equities in Monday’s U.S. session, further weighing on the greenback. Additionally, expectations for a more dovish Federal Reserve outlook intensified after Stephen Miran, a former White House adviser, confirmed he will join the Fed board and participate in upcoming policy decisions.
Traders are now awaiting U.S. retail sales data for August, due later Tuesday. A stronger reading could briefly support the dollar, though analysts suggest investors may avoid large positions ahead of the Fed’s policy meeting.
Meanwhile, U.S. stock futures were modestly higher in early European trading, reflecting cautious optimism. Should Wall Street extend gains at the open, dollar pressure may persist, keeping GBP/USD buoyant in the near term.