The GBP/USD pair advanced on Monday as the US Dollar (USD) trimmed some of last week’s gains ahead of a busy US economic calendar. The pair trades near 1.3430, up 0.24%.
Central Bank divergence and political focus support sterling
Despite ongoing UK fiscal concerns, GBP/USD received support from central bank divergence and political attention at the Labor Party conference in Liverpool. According to Chris Turner, head of forex strategy at ING, the conference will remain a key focus for investors.
The divergence favors Sterling as the Bank of England (BoE) is expected to hold rates steady, while markets have priced in nearly two rate cuts by the Federal Reserve (Fed). BoE Deputy Governor Dave Ramsden signaled confidence that current restrictive rates will bring inflation back to target.
Across the Atlantic, Cleveland Fed President Beth Hammack maintained a hawkish stance, noting that inflation remains too high and tariffs are contributing to the pause in disinflation.
US data and shutdown risks
Second-tier US data showed Pending Home Sales rose 4% MoM in August, surpassing forecasts and revising July’s contraction to a slight increase.
Meanwhile, Bloomberg reports that the US Bureau of Labor Statistics (BLS) will suspend all operations if a government shutdown occurs, potentially delaying economic releases.
Investors will also monitor further Fed commentary from Regional Presidents Alberto Musalem, John Williams, and Raphael Bostic later this week.
Technical Outlook: consolidation unless GBP/USD falls below 1.34
Technically, GBP/USD has seen consecutive bullish sessions but remains below the 1.3480–1.3500 zone, keeping downside pressure. The Relative Strength Index (RSI) indicates seller control. A sustained move below 1.3466 could push the pair toward 1.3400, with a breach exposing the September 25 swing low at 1.3324.
