GBP/USD rose on Tuesday as the U.S. dollar weakened and investors processed Finance Minister John Healey’s first major economic speech ahead of the October budget. Healey highlighted plans to give regions more authority to attract private investment and reiterated a commitment to fiscal discipline and cost containment.
The pledge helped restore the United Kingdom’s credibility in the international bond market, keeping the 10‑year gilt yield near 5.15%, a modest relief after the yield touched its highest level since 2008 last week.
Higher borrowing costs have been driven by renewed inflation concerns linked to the U.S.–Iran conflict and uncertainty over Prime Minister Andy Burnham’s spending agenda. On the data front, UK firms increased full‑time hiring in August for the first time in four years.
The Bank of England is not expected to raise rates next week, but market participants still anticipate a rate hike before year‑end, which offers some support to the pound. Meanwhile, the dollar eased after a stronger‑than‑expected U.S. jobs report that added 162,000 jobs in August and saw July’s figure revised higher. The data lifted market expectations that the Federal Reserve will raise rates at its September meeting, with the probability of a hike rising to about 65%.
Investors will watch U.S. inflation releases later this week, with the consumer price index and core personal consumption expenditures data due on Thursday and Friday. Higher‑than‑expected readings could cement expectations of a 25‑basis‑point Fed hike, bolstering the dollar and weighing on GBP/USD. Conversely, softer inflation could temper rate‑hike expectations, pulling the dollar lower and supporting the pound.
Technical analysis from the source notes that GBP/USD is trading in a rising channel after rebounding from a June low of 1.3140. The pair faced resistance at 1.3675 and found support near the 50‑day EMA at 1.3485. The analysis suggests that a move above 1.3500 could target the July high of 1.3650 and the August peak of 1.3675, with a break above 1.3675 opening the path toward 1.3700. On the downside, a break below the 50‑day EMA could expose the pair to 1.3450, then the 200‑day EMA at 1.3420, and potentially 1.3350.
