**British Pound Forecast: GBP/USD Poised for September Breakout (9/5/2025)**
*By Matthew Weller, StoneX Group Inc.*
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The British pound (GBP) has been one of 2025’s most closely watched currencies, as shifting Bank of England (BoE) policies, persistent UK economic headwinds, and cross-Atlantic macro forces have combined to generate significant volatility for GBP/USD. With September historically a significant month for the pound, traders and investors worldwide are searching for clarity on whether the pair is setting up for a major breakout – and in which direction.
Drawing from StoneX Self-Directed Analyst research, this in-depth analysis examines evolving economic data, critical technical patterns on the GBP/USD daily chart, and upcoming central bank meetings to provide a comprehensive outlook. The goal is to illuminate the key fundamental and technical factors that could drive a September breakout in the GBP/USD exchange rate.
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**Macro Backdrop: UK Economy Still in the Crosshairs**
The British economy has struggled in 2025. After narrowly dodging a technical recession in late 2024, the UK has registered only tepid growth in 2025, with GDP figures showing little progress amid rising unemployment, stubborn core inflation, and ongoing cost-of-living strains.
– **Inflation:**
– July 2025 CPI hit 3.1 percent YoY, still above the BoE’s 2 percent target.
– Persistent services inflation and wage growth are complicating the inflation outlook.
– **Labour Market:**
– Unemployment rate edged up to 4.7 percent in Q2 2025, the highest since early 2021.
– Wage gains remain strong but are showing initial signs of cooling.
– **Consumer Spending:**
– Retail sales declined for four out of the past five months.
– Household confidence remains depressed by high energy and food costs.
– **UK Fiscal Policy:**
– The UK government maintained its fiscal framework set out in March’s budget.
– Little fiscal room exists for major demand-side stimulus, given the persistent budget deficit.
– **Global Growth:**
– The eurozone recovery has stalled, limiting the demand for UK exports.
– China’s ongoing property sector issues have hurt global sentiment and exposure.
**Bank of England Policy: Coming to a Crossroads**
September 2025 has become a pivotal month for the Bank of England’s monetary policy. The central bank has kept the base rate on hold at 5.25 percent since March, reflecting a tricky balance between high inflation and weak growth.
**Key Points in BoE’s Policy Dilemma:**
– **Inflation is still above target** but projected to fall towards 2 percent by early 2026 according to BoE staff estimates.
– **Growth is stagnating**, with the BoE forecasting just 0.2 percent full-year GDP expansion for 2025.
– **Labour market slack is increasing**, raising the risk that wage-driven inflation abates further ahead.
– **Market pricing** (as of early September) implies around a 45 percent chance of a BoE rate cut at the September meeting, rising to over 80 percent for a cut by November.
Governor Andrew Bailey and his colleagues are signaling a more nuanced approach, pausing to assess the lagged impact of past rate hikes while aligning with their counterparts at the Federal Reserve and European Central Bank, both of which have adopted a “higher for longer” strategy. Nevertheless, dovish members and growing calls from business groups for looser policy have ensured that each Monetary Policy Committee (MPC) decision could catalyze significant volatility in sterling.
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**Dollar Dynamics: The Other Side of GBP/USD**
While UK-centric factors dominate local headlines, broader dollar trends remain central to the GBP/USD exchange rate.
**Key Factors Affecting the US Dollar:**
– **Fed Pause:** The Federal Reserve has signaled that
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