The Pound Sterling has experienced a significant decline, reaching a seven-week low against the US Dollar as it struggled to maintain levels above 1.3500. This shift in market sentiment comes as traders prepare for an influx of US labor data as the final quarter of 2025 approaches. The technical outlook for GBP/USD appears bearish, particularly as the currency pair has seen critical support levels from the 50-day simple moving average (SMA) give way, contributing to a negative daily relative strength index (RSI).
In recent trading sessions, the Pound reversed its initial recovery, plummeting below 1.3350 against the US Dollar. Factors contributing to this downturn include a broader resurgence of the Dollar, a cautious risk sentiment prevailing throughout the week, and disappointing UK business purchasing managers’ index (PMI) figures that increased selling pressure on the Pound.
Markets have re-evaluated their expectations for aggressive interest rate cuts from the US Federal Reserve due to positive economic indicators and cautious commentary from Fed officials. Following encouraging data, Fed officials such as Stephen Miran expressed concerns over the current monetary policy’s tightness, suggesting that without significant cuts, employment could be jeopardized. Fed Chair Jerome Powell also emphasized the complex balancing act required to address inflation and employment challenges during his speech in Rhode Island.
Despite some mixed signals from the S&P Global US preliminary PMI data for September, which indicated a slowdown in economic expansion, attention has largely focused on the UK where growth also slowed. The UK’s private sector PMI fell to 51 from 53.5, performing below market expectations and intensifying bearish sentiment for the Pound.
The decline in GBP/USD accelerated into the week’s latter half as the US Dollar capitalized on positive mid-tier economic reports, demonstrating resilience in the economy and dampening aggressive easing scenarios from the Fed. The US Gross Domestic Product was revised to an impressive 3.8% growth rate for the April to June period, surpassing initial estimates. Additionally, lower unemployment claims and a rebound in Durable Goods Orders solidified the Dollar’s strength.
As traders awaited the release of the core Personal Consumption Expenditures (PCE) Price Index—considered a key inflation measure by the Fed—recent tariff announcements by US President Donald Trump added another layer of complexity to market dynamics. The tariffs, particularly on pharmaceutical imports and other goods, may impact overall trade relations.
In a whirlwind of data forthcoming next week, attention will focus on crucial indicators starting with US Pending Home Sales on Monday, followed by the Job Openings and Labor Turnover Survey on Tuesday. Key employment data including the ADP Employment Change, ISM Manufacturing PMI, and a critical Nonfarm Payroll report on Friday will shape market expectations.
Technically, GBP/USD continues its downward trajectory after failing to hold firm above the 21-day SMA. The currency pair’s rejection at this level has set the stage for further declines as it pierced various support thresholds including the 100-day and 50-day SMAs. Sellers are keenly eyeing the 1.3300 psychological barrier, which if breached, could lead to a retest of even lower levels. The 14-day RSI remains below the midpoint, indicating sustained bearish pressure.
To reverse this trend, GBP/USD will need to break above resistance levels, particularly around 1.3475. Attaining this critical zone could open pathways to higher resistance levels that include the 21-day SMA and additional significant supply areas, yet the path ahead looks uncertain.
