**Pound to Dollar Week Ahead Forecast: Below 1.36, Traders Eye Jackson Hole**
*Original reporting by Adam Solomon, ExchangeRates.org.uk*
**The Pound to US Dollar (GBP/USD) exchange rate finished the prior week under significant pressure, briefly dipping under the key 1.36 level amid mounting global uncertainties and renewed demand for the US dollar. As anticipation rises for the Federal Reserve’s Jackson Hole symposium, investors remain cautious, maintaining a focus on central bank policy signals, economic data dynamics, and risk appetite across global markets.**
## Key Highlights
– GBP/USD slipped below 1.36, signaling vulnerability amid risk aversion
– US Federal Reserve’s Jackson Hole symposium looms large for forex traders
– Robust US economic data offsets some dovish sentiment from the Fed
– UK data and ongoing Brexit negotiations add to Sterling’s volatility
– Bank of England policy backdrop continues to lag Fed tightening prospects
– Investors eye inflation, employment, and retail sales on both sides of the Atlantic
## GBP/USD Recap: Pressure Below 1.36
The sterling’s performance last week was characterized by increased volatility and a clear bias toward US dollar strength. Risk aversion dominated much of the week’s trading activity as equities pulled back globally and safe-haven flows favored the dollar. The GBP/USD pair struggled in this challenging environment, using the 1.36 handle as a battleground before closing below this level.
Factors weighing on the pound included:
– Mixed-to-weak UK economic data, heightening concerns about the post-pandemic rebound’s durability
– Fresh concerns regarding Brexit trade terms and Northern Ireland protocol disputes
– The broad-based advance in the US dollar, propelled by resurgent bets on Fed policy tightening
Traders saw little incentive to maintain bullish sterling positions into the weekend, with market chatter suggesting that dollar demand was driven by both short-term positioning and a longer-term reevaluation of central bank policies.
## The US Dollar: Resurgent on Fed Policy Dialogue
The greenback’s advance stemmed from a noticeable shift in tone from Federal Reserve policymakers. Following July’s Federal Open Market Committee (FOMC) meeting, dovish messaging initially prevailed. However, several Fed officials later signaled a growing willingness to discuss scaling back the central bank’s asset purchases. This shift supported the US dollar and pressured riskier currencies, including the pound.
Market participants are now firmly focused on the anticipated policy signals at the Jackson Hole symposium. Historically, this gathering has been a platform for the Fed to outline significant policy changes, making it a critical event for dollar direction and sentiment.
Recent US data releases offered further fuel for dollar bulls:
– **Retail Sales:** While headline numbers disappointed, the core reading excluding autos proved more resilient, hinting at underlying economic strength.
– **Employment:** The previous non-farm payrolls report continued to bolster confidence in labor market recovery.
– **Inflation:** The latest Consumer Price Index (CPI) data revealed a modest softening, temporarily easing tapering fears but not eliminating them.
## Sterling’s Unique Risks: An Uncertain UK Outlook
For the pound, domestic factors are contributing to a less sanguine outlook when set against some of its G10 counterparts.
### Economic Indicators
Recent data have proved uninspiring for GBP bulls:
– **GDP Growth:** The latest readings signaled a slower-than-expected rebound, raising doubts over the UK’s momentum into year-end.
– **Inflation:** While Consumer Price Index data has surprised on the upside, Bank of England policymakers have so far characterized price gains as ‘transitory’, dampening tightening expectations.
– **Labour Market:** While headline figures appear solid, underlying measures (such as hours worked and underemployment rates) have cast a shadow on the jobs recovery narrative.
### Brexit and Political Risks
Brexit continues to influence investor sentiment and the pound’s trading narrative:
– Ongoing acrimony between the UK and EU, particularly regarding the Northern Ireland protocol, has
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