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James Fuller

STORY LINK Pound-to-Dollar Forecast: Hawkish Warsh Boosts USD, GBP Retreats to 1.3530

The Pound to Dollar (GBP/USD) exchange rate came under renewed pressure at the end of last week as a hawkish Jackson Hole speech from Federal Reserve Chair Kevin Warsh strengthened expectations of another US interest-rate increase.

GBP/USD retreated to around 1.3535 on Friday, down almost 0.5% on the day and well below the six-month highs above 1.3670 recorded earlier in August.

The Pound was unable to make headway in global markets, while the Dollar received fresh support as investors reassessed the outlook for Federal Reserve policy.

There remains an important support area around 1.3500-1.3550.

Scotiabank had maintained a constructive technical stance; “We see near-term support around 1.3600 and 1.3550. The trend from late June remains bullish however.”

Friday’s move below 1.3550 therefore weakens the immediate technical picture, although GBP/USD remains above the broader summer lows.

Warsh Revives September Fed Hike Expectations

Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech to reinforce the central bank’s commitment to returning inflation to its 2% target.

Warsh warned that financial conditions remained relatively loose and indicated that the Fed could need to raise interest rates if inflation fails to moderate sufficiently.

His comments represented a more hawkish message than investors had expected.

Markets subsequently raised the probability of a September rate increase to around 55%, compared with roughly 35% ahead of the speech.

This shift in expectations provided renewed support for US bond yields and the Dollar.

Danske Bank had commented ahead of the speech; “Markets will look for any hints about monetary policy in September.”

The speech ultimately provided a clearer signal than many investors had anticipated.

ING had previously maintained that the Fed would remain on hold in September, but acknowledged that stronger data or more hawkish communication could change market pricing.

The coming US inflation and employment figures will now carry even greater importance.

Energy Prices Remain Important for Central Banks

Energy prices will continue to be an important backdrop for monetary policy on both sides of the Atlantic.

MUFG commented; “The price of crude oil continues to defy expectations of sharper price rises and how the energy price story plays out over the coming weeks will be an important backdrop heading into a heavy month of G10 central bank meetings.”

Every major G10 central bank is due to meet during September, leaving markets unusually sensitive to shifts in inflation expectations and bond yields.

Higher energy prices would strengthen the argument for tighter monetary policy, while a sustained decline would reduce pressure on central banks to act.

UK rate expectations have moved in the opposite direction to the US in recent sessions.

Markets no longer fully price another Bank of England rate increase until early 2027, with only a limited probability attached to a September move.

Most economists expect the BoE to keep Bank Rate unchanged at 3.75% for the remainder of 2026.

Wider US economic fundamentals also continue to provide some support for the Dollar.

Brown Brothers Harriman global head of markets strategy Elias Haddad commented; “The big support for the dollar here is that the U.S. economy continues to outpace that of other major economies.”

He nevertheless remains cautious over the medium-term outlook.

Haddad added; “I don’t expect the dollar to make new highs, because of the risk of a more dovish Fed repricing and the lack of U.S. fiscal credibility are two big headwinds.”

US fiscal concerns remain significant, particularly after the recent surge in long-term Treasury yields and the Treasury’s decision to expand bond buybacks.

European central bankers have also expressed unease over increasingly unconventional US Treasury actions and the risk that political pressure could spill over into monetary and currency policy.

Near-Term GBP/USD Forecast: 1.35 Support Comes into Focus

GBP/USD has now surrendered most of the gains made during the middle of August.

The 1.3500-1.3530 area is the immediate support zone.

A sustained break below 1.3500 would weaken the short-term structure further and could expose 1.3450 followed by the August low around 1.3420.

On the upside, Sterling would need to regain 1.3600 to ease the immediate downward pressure.

A recovery above 1.3650 would be required to restore the stronger bullish structure seen earlier in August.

The combination of higher Fed rate expectations and weaker Bank of England tightening bets favours the Dollar, leaving upcoming US inflation and labour-market data crucial for the next GBP/USD move.

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TAGS: Pound Dollar Forecasts

The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027.

The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.

That leaves Cable well below its August high at 1.3675, but UBS has made no retreat from its bullish medium-term Sterling path.

Its updated forecast table reads: “GBP/USD: 1.40 Dec 2026, 1.41 Mar 2027, 1.41 Jun 2027, 1.41 Sep 2027.”

The rationale was set out more fully by UBS strategists Constantin Bolz and Dominic Schnider earlier this month.

“UK politics have shifted from a headwind to a potential tailwind,” they said, while “[Pound] Sterling remains relatively under-owned.”

That under-ownership matters if investors return after Friday’s Dollar-driven correction.

UBS has also argued that “long-dollar positioning remains vulnerable to a reversal”, creating scope for “existing long-dollar positions [to] be unwound” if Fed expectations soften again.

Friday went the other way.

Warsh pushed the implied probability of a September Fed hike from around 35% before his speech to 57.5%, while Sterling suffered its first weekly decline against the Dollar in more than a month.

We previously examined UBS’s increasingly positive Sterling view before the Jackson Hole reversal.

The forecast now has a cleaner test: holding around 1.35 would leave the 1.40 year-end scenario plausible, while renewed Fed tightening pressure would make the first hurdle, around 1.38, considerably harder to clear.

Our currency coverage draws on live market data, official economic releases and published bank research.

USD/JPY is back above 160 despite record intervention, reinforcing UniCredit’s warning that FX operations struggle when fundamentals resist them.

The US Dollar to Japanese Yen (USD/JPY) exchange rate closed Friday at 160.10, almost five Yen above the lows reached after the extraordinary joint US-Japan intervention.

That rebound is the uncomfortable backdrop to UniCredit’s question: “Is FX intervention a ‘losing game’? The JPY’s case.” The current analysis was published on 26 August.

UniCredit analysts had already made their underlying objection unusually clear before the joint operation.

“It would be a waste of FX reserves if the USD is already strong due to factors outside of Japan’s control,” the bank argued in earlier Yen analysis.

At the same time, UniCredit expected officials to keep trying: “We expect intervention to resume.”

The issue was never whether intervention could move USD/JPY for a few sessions.

It was whether intervention could overcome the interest-rate gap, expansionary Japanese fiscal policy and the economic damage from high imported energy costs.

Japan has now spent a record ¥15.4tn, around $96.5bn, intervening between 30 July and 26 August, yet Dollar-Yen finished August back above 160.

That outcome gives the “losing game” thesis more force.

As we noted in our recent Yen forecast, markets increasingly need the Bank of Japan to do part of the work itself.

A September rate increase could help.

Without a credible path towards further tightening, another intervention may again prove spectacular in the moment and frustratingly temporary afterwards.

Our currency coverage draws on live market data, official economic releases and published bank research.

The Euro-Dollar has dropped to 1.158 after Warsh revived Fed hike bets, but Rabobank still sees choppy trade giving way to 1.18 into spring.

The Euro to Dollar (EUR/USD) exchange rate ended Friday at 1.1582 after Kevin Warsh’s Jackson Hole speech triggered the Dollar’s strongest daily advance in more than two months.

The pair had spent most of the previous 48 hours between 1.1640 and 1.1660 before collapsing through 1.1600, leaving Friday’s close close to the bottom of the session range.

Rabobank still expects the broader picture to remain frustratingly two-sided rather than turn into a clean Dollar rally.

“We see scope for further choppy range trading in EUR/USD in the coming months with an upside bias likely lifting the currency pair to the 1.18 area into the spring.”

That forecast looks more interesting after Friday.

Warsh pushed the market-implied probability of a September Fed hike from around 35% to 57.5%, while EUR/USD fell roughly 0.6% to 1.1582.

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Friday’s break lower interrupted what had been a surprisingly resilient August for the Euro, but Rabobank does not think the pair will be driven primarily by European developments from here.

“In view of the imbalance of uncertainties, we expect that price action in EUR/USD in the coming weeks will continue to be dominated by news pertaining to the USD rather than the EUR.”

The “Bessent Put” Complicates the Dollar Story

Rabobank’s argument centres on an increasingly awkward relationship between the US Treasury and the Fed.

“Since the announcement last week that the US Treasury would at least double the size of its bond buyback operations, the market has been discussing the potential for a ‘Bessent put’ and how willing the US Treasury Secretary may be to stem a rise in long-term interest rates.”

The bank sees an obvious political incentive ahead of November’s mid-term elections, but also a cost.

“The market’s ability to signal concerns over fiscal policy, inflation and reflect a true balance between supply and demand could be dampened.”

“This has raised questions over the Treasury’s credibility, which have re-opened the debate about USD debasement.”

Lower long-term yields could also keep financial conditions looser than they otherwise would be, potentially leaving inflation higher for longer and increasing the prospect of tension between Treasury policy and the Fed.

That tension was visible even before Warsh spoke, with Reuters highlighting the contrast between Treasury efforts to push long yields down and the Fed Chair’s emphasis on maintaining inflation discipline.

Rabobank Trusts the ECB More Than the Fed

The Eurozone hardly has an easy inflation outlook either.

Rabobank notes that headline inflation reached 3.2% earlier this year as the Iran-war energy shock fed into consumer prices, with the duration of the conflict still critical for the outlook.

Yet the bank sees one important difference.

“The market has a strong belief in the ECB’s inflation fighting credentials. The Fed’s credibility, by contrast, is still up for debate.”

Eurozone inflation expectations have remained relatively contained, while Rabobank expects another ECB hike in September after June’s increase.

The economy has also held up better than feared.

“Stronger than expected Eurozone Q2 GDP growth data and a decent round of August PMI numbers reflect an economy which has been resilient in the face of this year’s energy price shock.”

That resilience has not translated into aggressive Euro buying.

“The market has been reluctant to build long EUR positions against the backdrop of the Iran war in view of the Eurozone’s energy importer status and the headwinds to growth and inflation that this status implies.”

Hence Rabobank’s near-term conclusion is deliberately restrained.

“In the absence of an end to the war, we expect the EUR’s upside potential to remain contained and favour choppy range trading for EUR/USD around the 1.16 to 1.17 area in the months ahead.”

That 1.16 floor is already being tested after Warsh.

We noted in our previous Rabobank EUR/USD forecast that the bank had brought forward its 1.18 target as US debt-market concerns intensified.

Friday has not removed that forecast, but it has made the path rather less comfortable.

If Fed hike pricing continues to build, EUR/USD can spend more time below Rabobank’s preferred 1.16-1.17 zone.

If Treasury intervention again pulls long yields lower while confidence in US policy comes under pressure, the Dollar side of the equation could reverse quickly.

For Rabobank, that tug of war is the forecast: messy around 1.16-1.17 first, then a gradual move towards 1.18 into spring.

The U.S. Dollar Index has almost reached 99.20 on the 4-hour chart as it has recovered from the 98.56 low and gone back above the 50-EMA, which is at 99.16, although the price is still below the 100-EMA and is still below the descending trendline, so the bullish structure on a short-term basis is still not fully in play.

The 99.25 pivot level is an important zone. This is close to the 61.8% Fibonacci level and is at 99.25. If this level is broken and successfully held above it, then the extension of the bullish structure would bring the price to at least 99.48, where it would then extend to 99.68 and 99.99. The next significant level would be 100.38, beyond which there is a clear price extension. If the price is not able to hold above this level, then 99.12 and 98.99, 98.82 and 98.56 would be the next support levels.

The RSI at this point is at 57 and is showing a bullish bias for the recovery and price structure. In my opinion, this is a critical level for the U.S. Dollar Index from a price structure point of view. A confirmed break above 99.25 and the descending trendline would suggest that a bullish structure is more likely, and a move back toward 98.99 to 98.82, with price extending below the trendline is likely.

GBP/USD Technical Analysis: Pound Breaks Channel Support as 1.3565 Becomes Critical

2026.08.28 2026.08.28
GBP/USD: Elliott Wave Analysis and Forecast for 28.08.26–04.09.26

Alex Geutahttps://www.litefinance.org/blog/authors/alex-geuta/

Major Takeaways

• Main scenario: Consider long positions from corrections above 1.3516 with a target of 1.3870–1.4140. A buy signal: the price holds above 1.3516. Stop Loss: below 1.3470, Take Profit: 1.3870–1.4140.
• Alternative scenario: Breakout and consolidation below 1.3516 will allow the pair to continue declining to the levels of 1.3275–1.3140. A sell signal: the level of 1.3516 is broken to the downside. Stop Loss: above 1.3560, Take Profit: 1.3275–1.3140.

Main Scenario

Consider long positions from corrections above 1.3516 with a target of 1.3870–1.4140.

Alternative Scenario

Breakout and consolidation below 1.3516 will allow the pair to continue declining to the levels of 1.3275–1.3140.

Analysis

On the weekly time frame, an ascending wave of larger degree (A) of B is developing. Within it, wave 1 of (A) has formed, a downward correction has been completed as wave 2 of (A), and the third wave 3 of (А) is unfolding. Apparently, the third wave iii of 3 is developing on the daily time frame, within which a local correction has formed as wave (ii) of iii. Wave (iii) of iii is developing on the H4 chart, with wave iii of (iii) unfolding as its part. If the presumption is correct, GBP/USD will continue to rise to 1.3870–1.4140. The level of 1.3516 is critical in this scenario as a breakout below it will enable the pair to continue declining to the levels of 1.3275–1.3140.

This forecast is based on the Elliott Wave Theory. When developing trading strategies, it is essential to consider fundamental factors, as the market situation can change at any time.

Price chart of GBPUSD in real time mode