GBP/USD stabilized near 1.3410 during Friday’s Asian session after four consecutive days of declines. The pair has struggled as the US Dollar strengthened in response to robust economic data released on Thursday. Traders now look to Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium for guidance on the September policy decision.
US Data Recap:
PMI figures showed mixed but mostly positive momentum. The Composite PMI rose to 55.4 from 55.1, while the Manufacturing PMI jumped to 53.3 from 49.8, beating expectations of 49.5. The Services PMI eased slightly to 55.4 from 55.7 but still outperformed forecasts of 54.2.
Labor market data was less encouraging, with Initial Jobless Claims climbing to 235K — an eight-week high and above expectations of 225K — hinting at some cooling in employment conditions.
The combination of stronger PMI readings and higher jobless claims underscores the Fed’s challenge of balancing persistent inflation pressures with emerging labor market weakness. According to the CME FedWatch tool, market odds for a September rate cut have slipped to 74% from 82% earlier this week.
Fed Commentary:
Chicago Fed President Austan Goolsbee noted Thursday that the September meeting remains open, reflecting ongoing uncertainty.
Boston Fed President Susan Collins signaled willingness to support a rate cut as early as September, citing tariff impacts and labor market softness, though near-term inflation risks remain a concern.
UK Outlook:
In the UK, consumer sentiment improved slightly, with the GfK Confidence Index rising to -17 in August from -19 in July — the best reading in a year. The boost came after the Bank of England’s recent rate cut. However, confidence remains fragile due to stubborn inflation, rising unemployment risks, and looming tax increases.
Summary
GBP/USD trades around 1.3410, holding steady after recent losses, with attention on Powell’s Jackson Hole speech.
US data showed stronger PMI but rising jobless claims, complicating the Fed’s rate outlook.
Markets now price in a 74% chance of a September Fed rate cut, down from 82%.
UK confidence improved modestly to its highest level in a year, but inflation and fiscal pressures keep sentiment cautious.
