**GBP/USD Remains Subdued Below 1.2800 as Greenback Strength Persists
Original Analysis by FXStreet Team**
Source: [Mitrade FXStreet News](https://www.mitrade.com/insights/news/live-news/article-1-1097081-20250905)
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The GBP/USD currency pair continued to trade without significant upward momentum below the psychologically significant level of 1.2800 during Wednesday’s European trading session. A combination of a broadly stronger US dollar (USD), risk-aversion trends, and a lack of major bullish catalysts for the pound sterling (GBP) weighed on cable’s intraday performance.
In the broader context, evolving economic data and market themes generated a cautious trading environment as investors looked for further direction from upcoming macroeconomic releases—particularly from the US and UK. This comprehensive article examines the factors influencing GBP/USD, the technical outlook, and what lies ahead for traders and investors.
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## Overview of GBP/USD Movement
– GBP/USD traded listlessly below the 1.2800 handle during European hours.
– The currency pair had previously suffered from a rejection at session highs near 1.2830–1.2840.
– Dollar resilience, risk-off flows, and tepid UK data have curbed meaningful upward momentum for sterling.
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## US Dollar Strength and Market Sentiment
The US Dollar Index (DXY), a gauge of the dollar’s strength against a basket of major currencies, remained buoyant, hovering near recent multi-week highs. The greenback drew support from several drivers:
– **Firm Economic Data**: The US economy has continued to show resilience, particularly with labor market conditions remaining robust and inflation data suggesting stickiness in price pressures.
– **Yield Dynamics**: Benchmark Treasury yields have underpinned the dollar. The 10-year US Treasury yield held steady above 4.0 percent, reflecting expectations of “higher for longer” by the Federal Reserve.
– **Global Risk Aversion**: Ongoing geopolitical uncertainties in Eastern Europe and the Middle East, as well as concerns over global growth, have sustained safe-haven demand for the greenback.
Investors’ cautious approach ahead of Federal Reserve Chair Jerome Powell’s scheduled speech later this week further buttressed dollar demand. The market was keenly focused on any commentary that could hint at future US monetary policy direction, given ongoing debate about the timing and extent of forthcoming rate adjustments.
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## Macroeconomic Backdrop
### Key Recent Data Releases and Their Impact
#### United States
– ISM Services PMI for June surpassed expectations, underscoring continued expansion in the services sector.
– Recent US jobless claims showed little sign of broad-based labor market deterioration.
– The core PCE Price Index, the Federal Reserve’s preferred inflation gauge, remained above the central bank’s 2 percent target.
#### United Kingdom
The pound sterling faced its own set of challenges:
– **GDP Growth Concerns**: Recent GDP figures from the Office for National Statistics (ONS) indicated some loss of economic momentum, with Q1 2024 growth falling short of forecasts.
– **Inflation Data**: While headline inflation has eased, underlying price pressures remain uncomfortably elevated for the Bank of England (BoE).
– **Labor Market Trends**: Employment data hints at softening labor demand, even as wage growth continues to outpace expectations, complicating policy decisions for the central bank.
### Central Bank Policy Expectations
#### Federal Reserve
– Markets have dialed back expectations for significant Fed rate cuts in the latter half of 2024, in light of strong economic readings.
– Futures contracts now imply only modest easing by year-end, keeping the dollar broadly supported.
#### Bank of England
– Amid sticky inflation, the BoE has adopted a notably cautious tone.
– Policymakers are closely watching wage growth, services inflation, and broader economic conditions.
– The likelihood of a rate cut by September remains finely balanced, with market pricing
Read more on GBP/USD trading.