Created on August 27, 2025

• The British pound rallied slightly during the session on Tuesday against the US dollar, as market participants are still trying to sort out what it is the Federal Reserve is doing.
• It’s worth noting that on Friday, after the speech by Jerome Powell at Jackson Hole, the US dollar was pummeled by multiple currencies as traders started to price in the idea of perhaps the Federal Reserve cutting rates.
• However, the Monday session saw a huge drop, although it didn’t wipe out the overall gains.

Now we have seen the market turned back around, but it’s also worth noting that the bullish candle was exactly that big. This tells me that we are more likely than not to try to settle into a short-term range.

Neutral Stance of British Pound?

While the British pound has been one of the better performers against the US dollar over the last couple of years, even on the way down, the reality is that the market has now slowed down and it looks as if the British pound might be going a little bit more neutral. If that’s going to be the case, I would be surprised at all to see the 1.36 level continue to hold as resistance, but it’s also possible that the 1.34 level continues to hold as support, but it’s also possible that the 1.34 level gives way. If it does, then the stance on the British pound changes rapidly, and it becomes much more bearish. All things being equal, this is a market that will continue to move right along with other dollar related currency pairs, but the British pound of course has been stronger than many of his contemporaries.

All things being equal, we will be paying close attention to what the Federal Reserve has to say, and therefore it makes a certain amount of sense that the overall attitude of the Federal Reserve will give us a “heads up as to where the US dollar itself goes.

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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.