The GBP/USD rallied above 1.3500 as Federal Reserve Chair Jerome Powell spoke at the Jackson Hole Symposium, hinting that the Fed may be ready to resume its easing cycle.
Markets price in higher odds of september rate cut
Powell’s remarks have boosted expectations for a September rate cut.
Markets now fully price in 50 basis points of cuts by year-end, with the probability of a September reduction rising from 75% to 90%.
He highlighted rising downside risks to the labor market while noting that the unemployment rate and other indicators allow the Fed to proceed cautiously.
Powell also said tariffs could cause a temporary inflation spike, with inflation risks tilted upward and employment risks downward—raising concerns about a potential stagflation scenario.
GBP/USD technical outlook
Technically, GBP/USD breaking above 1.3500 opens the door to further gains.
A move past 1.3550 targets the August 14 peak of 1.3594, followed by 1.3600.
On the downside, a drop below 1.3500 would first test 1.3482, then 1.3450.
