The British Pound (GBP) fell sharply against the US Dollar (USD) on Friday, sliding 0.52% despite upbeat UK Retail Sales data. GBP/USD dropped to 1.3482 as the Greenback extended its rebound from three-year lows following the Federal Reserve’s (Fed) rate cut earlier this week.
Sterling pressured by Dollar recovery and UK fiscal concerns
Market sentiment remained mixed amid quad witching expirations in US equity markets, while the Dollar Index (DXY) held steady near 97.62 after rallying on Fed-related optimism. The Fed cut rates by 25 basis points on Wednesday—a move fully priced in—but follow-up commentary from policymakers kept demand for the Greenback intact.
Minneapolis Fed President Neel Kashkari said the cut was warranted by rising unemployment risks, while cautioning that inflation is unlikely to exceed 3% from tariff effects. He added that the Fed should pause further easing if jobs data improve and signaled openness to rate hikes should economic conditions justify.
In the UK, Retail Sales for August rose 0.5% MoM, beating expectations of 0.4%, though July’s figures were revised slightly lower. The upbeat data failed to lift Sterling as concerns over Britain’s fiscal outlook continued to weigh on sentiment.
Upcoming data in focus
Next week’s calendar brings key US releases, including S&P Global flash PMIs, durable goods orders, jobless claims, GDP data and the Fed’s preferred inflation measure, the Core PCE. In the UK, flash PMIs and remarks from Bank of England (BoE) policymakers will take the spotlight.
GBP/USD price forecast: bearish bias below 1.3500
GBP/USD turned lower this week as an “evening star” pattern drove the pair beneath 1.3500, shifting the short-term bias to bearish. A sustained move below the confluence of the 100- and 50-day SMAs near 1.3477–1.3463 could expose the September 3 low at 1.3332.
On the upside, a daily close above 1.3600 would ease downside pressure and open the door for a retest of the yearly peak at 1.3788.
