GBP/USD Rebounds Toward 1.3550 After Powell’s Dovish Shift

The GBP/USD exchange rate staged a sharp rebound after Jerome Powell’s Jackson Hole remarks shifted Fed expectations toward an imminent September cut. The pair jumped from a weekly low of 1.3387 to an intraday high of 1.3548, settling near 1.3499 as U.S. Treasury yields slipped and dollar demand weakened. Fed funds futures now price a 93% probability of a September cut and project more than 50 basis points of easing by year-end. Powell’s acknowledgment of “downside risks to the labor market” outweighed persistent inflation at 2.7% headline and 3.1% core, giving traders reason to pare long-dollar positions.

Divergence Between Fed and Bank of England Policies

The rebound in GBP/USD comes against the backdrop of policy divergence. While the Fed leans toward easing, the Bank of England is expected to keep rates unchanged after UK inflation accelerated. July CPI printed at 3.8%, with the Retail Price Index rising to 4.8%, reinforcing BoE Governor Andrew Bailey’s warnings about “acute challenges” for growth and price stability. This contrast suggests Sterling could remain supported if the Fed cuts rates first while the BoE stays cautious.

Technical Structure and Price Patterns in GBP/USD

On the daily chart, GBP/USD has carved out an inverse head-and-shoulders pattern, a classic bullish reversal signal. The neckline sits near 1.3587; a breakout above this level would clear the path toward 1.3700, while downside support lies at 1.3450 and 1.3400. The pair also trades above its 25-day and 50-day EMAs, confirming that momentum favors the pound despite intermittent profit-taking. Friday’s bullish engulfing candle reinforced the recovery structure, but resistance at 1.3594—the August high—remains the critical barrier for further upside.

Short-Term Risks and Market Drivers

Dollar demand returned briefly in Asia trading, pushing GBP/USD back to 1.3495, though Powell’s dovish tone capped the downside. U.S. New Home Sales fell by 0.6% in July, adding to the case for Fed easing. Upcoming catalysts include the U.S. PCE price index on August 29 and nonfarm payrolls on September 5. A weak print on either could accelerate the dollar’s decline, while sticky inflation risks might revive the Fed’s higher-for-longer stance, reversing gains in Sterling. In the UK, focus turns to the BRC Shop Price Index, which will guide expectations for the next inflation trend.

GBP/USD Outlook

Sterling sits at a pivotal junction, consolidating just below 1.3550 after its best weekly gain in over a month. A decisive close above 1.3594 would unlock upside targets near 1.3787, while a slip under 1.3393 would put 1.3140 back into play. With Powell shifting the Fed toward cuts and the BoE holding firm, the policy divergence is currently Sterling-positive. For now, the market favors further upside in GBP/USD, but execution depends on whether data confirm or challenge the dovish Fed narrative.

That’s TradingNEWS

The 200-day EMA is in this neighborhood, but it is flat, suggesting that perhaps people just aren’t that interested in putting a lot of risk on. That could be true, but I would also point out that we are in the dead of summer, and that of course means that volume is a little bit lighter anyway.

AUD/USD Technical Analysis

And in the Australian dollar, it looks like we are rallying just a touch, but at this point in time I would also point out that the 50-day EMA seems to be offering a bit of resistance. And then again, we have the 0.6550 level. That’s an area that has been a bit of trouble for quite some time. You’ll notice that there was a previous uptrend line that has proven itself to be somewhat resistant as well. It’s a bit of a messy trend line, but it does give you an idea of the overall attitude of the market.

While the Euro and the pound were both performing very well against the U.S. dollar, the Australian dollar just ripped it, so I don’t like the Aussie dollar in general and I do think that eventually, if the U.S. dollar starts to pick up strength, this one here is going to fall apart. I prefer to fade rallies in this market.

For a look at all of today’s economic events, check out our economic calendar.

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Platinum price took advantage of its repeated positive stability above the breached obstacle level at $1342.00, besides providing positive momentum by the main indicators, achieving the suggested targets by hitting $1383.60, to force it to provide some sideways trading by its fluctuation near $1355.00.

By the above image, we notice the stability of the moving average 55 near $1342.00 level, reinforcing the chances for forming an important extra support level, increasing the efficiency of the bullish track, to expect reaching $1383.00 and surpassing it will form the next main target for the bullish track at $1420.00 level.

The expected trading range for today is between $1340.00 and $1383.00

Trend forecast: Bullish

• The GBP/USD forecast remains positive above 1.3500 after the Fed’s dovish tone.
• The BOE-Fed divergence points at stronger gains towards fresh yearly highs.
• Markets are in a lull before key macro releases like US GDP, Core PCE, and Durable Goods Orders.

The British pound pared its losses sharply on Friday after Fed Chair Powell struck a dovish tone in his Jackson Hole speech. The US dollar lost traction from its weekly top, lending room to the GBP/USD to soar to the 1.3540 area before easing slightly to 1.3490. The move suggests growing expectations of the Fed to pivot to rate cuts as early as September.

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The Fed Chair signaled that the Fed is more cautious about the labor market than inflation, as he highlighted the risk of decreased employment after weak jobs data in July, with only 73k new jobs added and unemployment ticking up to 4.2%. On the other hand, the inflation remains elevated with core CPI at 3.1%. Powell’s remarks triggered a sell-off in the Dollar Index to a 4-week low of 97.60 with US10Y falling to 4.24%.

From the UK, the Bank of England is left with little room to ease policy. UK inflation for July remained sticky with core CPI climbing to 3.8% and retail price index to 4.8%. BOE Governor Bailey at Jackson Hole noted that the UK faces challenges, including reduced labor participation, weak growth, and a demographic shift since the pandemic.

This policy divergence leaves Sterling in a strong position against the greenback as traders expect at least one rate cut by the Fed, while the BOE is seen holding rates steady for longer.

Data Ahead: Core PCE and GDP to Drive USD

The coming week brings several high-impact US releases that could test the GBP/USD rally. Key prints include:

• US Preliminary GDP (Thursday): Expected to confirm slowing growth momentum.
• Core PCE Price Index (Friday): any downside surprise would strengthen the case for September cuts.
• Durable Goods Orders (Monday): A soft print may reinforce growth concerns.

UK markets are closed for the Summer Bank Holiday on Monday, likely muting volatility in early trade.

GBP/USD technical forecast: Inverse Head & Shoulders Points to More Upside

The GBP/USD 4-hour chart shows the pair is struggling to find acceptance above the 1.3500 handle. However, the pair has formed an inverse H&S pattern with neckline resistance at 1.3580. A decisive breakout could lead the rally to the 1.3700 mark.

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The RSI remains neutral around 60.0, suggesting more room for the bulls but lacking a catalyst at the moment. On the downside, the immediate support emerges at 1.3460 ahead of 1.3400.

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Created on August 25, 2025

• Friday is seen the US dollar plunged rather significantly against the Japanese yen after the Jackson Hole speech by Jerome Powell.
• At this point, it looks as if the Federal Reserve is at least “open to the idea of cutting rates”, which is something that is fairly new.
• This has people suspecting that maybe the Federal Reserve will cut rates, and the Fed Funds Futures markets have a 91% chance of a rate cut in September priced in again.
• At one point, we dropped about 25%, but now it looks like the market is all but convinced it’s going to happen.

That being said, you have to be careful with these moves, because quite often, the initial “knee-jerk reaction” isn’t necessarily the correct one. After all, despite the fact that we have fallen rather significantly, we are basically just at the bottom of the consolidation area that we have been in for 2 weeks. The question then is whether or not this will change things? I don’t know if it will, I think it’s a little too early to make that determination, especially considering that even if the Federal Reserve were to cut twice this year, as the Fed Funds Futures markets expect, you are still talking about an interest rate differential that is wide enough to drive a truck through.

Technical Analysis

I’m watching the ¥149 level very closely, because if we were to break above there, then it would be very poor for the Japanese yen. Conversely, if we break down below the ¥146 level, then I think the US dollar could drop to the ¥145 level. Anything underneath there opens up the possibility of the ¥142 level being targeted.

Do not get me wrong, the candlestick is very ugly and could lead to something quite drastic. However, a couple of weeks ago we had a massive bearish engulfing candlestick that was followed up by nothing but sideways action. This is a very choppy and erotic currency pair, so make sure that you are careful with your position size.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.