**Pound Sterling to Dollar Week-Ahead Forecast: Core PCE, GDP Revisions to Steer Dollar**
*Based on original article by Adam Solomon, ExchangeRates.org.uk*
As financial markets approach the final days of August, the GBP/USD currency pair finds itself positioned at a pivotal juncture, with a combination of US data releases and UK economic sentiment set to sway price action over the coming week. Analysts are preparing for a series of events that could inject volatility into the Pound Sterling to Dollar exchange rate, with key US reports such as the Core Personal Consumption Expenditure (PCE) Price Index and second-quarter GDP revisions representing critical potential catalysts.
This week-long preview will break down the latest outlook for GBP/USD, identify the main economic data and events likely to drive movements, and explore the technical landscape for traders keeping a close eye on Sterling-Dollar dynamics. The analysis draws on market commentary, macroeconomic trends, and technical signals to help inform decisions during what could be a defining week for the pair as markets digest the Federal Reserve’s and Bank of England’s respective paths.
### **Current GBP/USD Sentiment: Fragile Optimism Amid Dollar Resilience**
After demonstrating notable resilience through mid-summer, the Pound Sterling has shown tentative signs of softening against the US Dollar. Pound bulls point toward persistent UK wage growth and signs of price stickiness as factors that could prevent an aggressive Bank of England policy pivot. Yet, concerns about growth momentum in the UK economy, especially following disappointing retail sales and labor market updates, have tempered enthusiasm.
The US Dollar, meanwhile, remains supported by exceptionalism narratives and safe-haven flows, even as some headline macro data has softened. Investors closely monitor the communication and outlook of the Federal Reserve amid renewed speculation over the duration of higher interest rates. Recent hawkish Fed rhetoric and sticky core inflation data have lent strength to the greenback, keeping the GBP/USD pair anchored below key resistance levels.
Key elements shaping GBP/USD sentiment entering this week include:
– **US labor market durability and wage growth:** which signal scope for prolonged Fed tightness.
– **UK inflation and wage growth trends:** which complicate Bank of England’s rate pivot considerations.
– **Relative economic growth prospects:** between the US and UK.
– **Risk sentiment and global growth signals:** with a backdrop of dovish commentary from China and Europe.
### **US Data in Focus: Core PCE and GDP Revisions**
The centerpiece of this week’s FX calendar is the release of the US Core PCE Price Index, widely considered the Federal Reserve’s preferred gauge of inflation. Released on Thursday, this data has the potential to recalibrate expectations around the Fed’s policy trajectory for 2024 and beyond.
Key aspects to watch in the Core PCE release:
– **Month-on-month and year-on-year readings:** These will indicate whether price pressures are abating fast enough to support a central bank pause or a potential rate cut narrative.
– **Services inflation:** Still elevated, services inflation remains a persistent concern for the Fed and may feed through to broader wage and price-setting behavior.
– **Potential for upside surprises:** Any indications that inflation is not cooling quickly enough could prompt a hawkish shift in market sentiment, strengthening the Dollar.
In tandem with the PCE release, GDP revisions for Q2 are also due. While initial readings reflected robust growth, the risk of revision lower cannot be discounted. Any backward adjustments to the first or second quarter GDP growth could weigh on the Dollar if markets perceive deceleration in the US economy.
Traders should watch for:
– **Headline GDP growth rate revisions**
– **Composition of GDP:** with particular focus on consumer spending and business investment.
– **Implicit signals for Fed policy:** as strong GDP growth may bring higher-for-longer rate expectations back to the forefront.
### **UK Backdrop: Persistent Wage Growth, Softening Consumer, BoE Dilemma**
While the US data calendar dominates, UK-specific factors will continue to play a crucial role in
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