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GBP/USD Drops to Three-Week Low as Positive US Data Bolsters the Dollar Ahead of Major Inflation Report

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  • September 25, 2025
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British Pound (GBP) dropped to its three-week low versus the US Dollar (USD) on Thursday, with GBP/USD going below the 1.3400 level to trade at around 1.3366, as favorable US economic data fueled demand for the Greenback. Sturdy releases, such as a vicious quarter-upward revision of Q2 GDP to 3.8%, beneath-expectation initial jobless claims of 218K, and an August Durable Goods Orders 2.9% leap, supported faith in the US economy. Although core PCE inflation in Q2 modestly increased to 2.6%, market participants already await Friday’s report on August core PCE, which is set to give essential information regarding the next steps of the Federal Reserve on monetary policy. In the meantime, Fed officials are implying a “slightly restrictive” policy, weighing inflation worries against a primarily healthy labor market. KEY LOOKOUTS • Traders are keeping an eye on the August core PCE reading, which may shape the Federal Reserve’s future interest rate moves. • Solid GDP growth, high durable goods orders, and low unemployment claims underpin the US Dollar and may continue to hold GBP/USD in check. • Fed officials’ comments indicate a “slightly restrictive” monetary policy, emphasizing balancing inflation with labor market stability. • GBP/USD is around the 1.3360–1.3400 level, and any move below this level can generate further bearish momentum. GBP/USD dipped to a three-week low as solid US economic data supported the US Dollar, with the pair falling below 1.3400 to quote around 1.3366. Strong US signals in the form of a revised Q2 growth of 3.8% GDP, below-forecast jobless claims, and a snapback in durable goods orders supported market optimism in the US economy. Traders are now focusing their attention on Friday’s core PCE inflation report, which is expected to be monitored closely for Fed hints on its next move in monetary policy, as Fed officials continue to stress a slightly restrictive tack under conditions of balanced labor market conditions. GBP/USD dropped to a three-week low around 1.3366 following robust US economic data that supported the Dollar. Investors now wait for Friday’s core PCE inflation reading to get cues on the Fed’s next step. • GBP/USD dipped below the 1.3400 level, hitting a three-week low around 1.3366. • Robust US GDP growth was revised sharply higher to 3.8% in Q2. • Initial Jobless Claims dropped to 218K, better than market forecasts. • Durable Goods Orders increased 2.9% in August, indicating robust US economic activity. • Core PCE prices for Q2 rose modestly to 2.6%, narrowly beating expectations. • Fed officials keep a “slightly restrictive” bias and watch inflation and labor market risks closely. • Attention in the markets turns to Friday’s core PCE inflation report, which may have implications for future Fed policy. The British Pound lost value against the US Dollar on Thursday as solid US economic data fueled widespread Greenback demand. Critical releases indicated a strong US economy, with Q2 GDP growth revised to 3.8%, initial jobless claims dipping to 218K, and durable goods orders rising 2.9% in August. The data underscored ongoing economic strength and bolstered confidence in the resilience of the US Dollar. GBP/USD DAILY CHART PRICE SOURCE: TradingView Market eyes are finally on Friday’s central PCE inflation report, which will give some additional insight into the Federal Reserve’s monetary policy direction. Meanwhile, Fed officials have reaffirmed the need to keep a slightly restrictive policy stance in order to weigh inflation concerns against the general stability of the labor market. Market observers are following closely as they try to discern the possible path for US interest rates and the general level of economic conditions. TECHNICAL ANALYSIS GBP/USD broke below the important psychological support level of 1.3400, showing bearish short-term momentum. The pair is currently testing levels around 1.3360, with current resistance at 1.3420–1.3450. Moving averages are pointing towards a downtrend, while momentum indicators are hinting at continued selling pressure, which means that further falls are possible if the pair cannot regain important support levels. FORECAST GBP/USD can remain under pressure to the downside as solid US economic figures validate the Dollar. If the pair drops below the existing support level around 1.3360, it can test new lows at levels of 1.3300–1.3320. Market participants will likely be cautious ahead of the core PCE inflation print this Friday that can further increase volatility. A correction is still possible if the Dollar loses steam or UK economic data positively improves. Under those circumstances, GBP/USD may try to re-take the 1.3400–1.3450 area, with resistance around 1.3480–1.3500 being an important hurdle to further gains. Market sentiment will be heavily reliant on future data and Fed cues, leaving the pair vulnerable to economic news both on the Atlantic side and in the US.

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Currencies

USD/CAD Falls as US Recession Jitters and Trade Tensions Drag on the Dollar

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  • April 14, 2025
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The USD/CAD currency pair continued its downward trend on Monday, falling towards 1.3850 as market mood turned bearish amid heightening fears of an impending US recession and persistent inflation. The US Dollar faced further pressure from renewed trade tensions between the US and China, following both countries’ announcements of severe tariffs increases that boosted fears of a global slowdown. Despite the announcement of a temporary truce, uncertainty in the market remains elevated. Meanwhile, the Canadian Dollar is deriving some strength from capital flows relocating from US assets, albeit its gains are limited by modest crude Oil prices, as continued concerns surrounding reduced global demand drag on the commodity-sensitive currency. KEY LOOKOUTS • Traders will keep a close eye on future US economic data, such as retail sales and jobless claims, for additional indications of recession risk and inflationary trends. • Any news or change in trade talks after the 90-day tariff ceasefire between China and the US could have a major impact on market sentiment and the USD/CAD currency pair. • The Canadian Dollar’s strength continues to be dependent on crude oil performance; any significant changes in international oil demand or supply would affect the direction of CAD. • Market participants will pay close attention to Fed officials’ statements for hints about future interest rate actions, particularly against the backdrop of escalating recession and inflation fears. In the coming days and weeks, market focus will be on a few key factors guiding the USD/CAD pair. Coming US economic indicators, particularly retail spending and jobless claims, will provide new information on recession threats and inflation expectations. Progress in the current US-China trade war will be another prime driver of sentiment, with the new 90-day tariff ceasefire providing little more than short-term respite. In the meantime, the Canadian Dollar’s resilience may be challenged by price action in crude Oil, which remains susceptible to fears about global growth. In addition, Federal Reserve policymakers’ comments in the days ahead could give added guidance on direction of future rate policy as economies continue to confront uncertainty. Traders will continue to monitor US economic statistics and the unfolding US-China trade tension for new direction in markets. The Canadian Dollar’s resilience is also dependent upon Oil price stability, and comments from the Fed could influence subsequent USD sentiment. •   USD/CAD continues to fall, coming close to 1.3850, amidst rising US recession fears and recalcitrant inflation. •    Increased US-China trade tensions instill risk aversion and additional pressure on the US Dollar. •    China’s steeply rising tariffs on US imports incite concerns about global economic slowdown. •   Poor US consumer sentiment and soft labor market data exacerbate investor nervousness. •   A short-term 90-day ceasefire between the US and China provides only limited relief in markets. •   Canadian Dollar draws strength from capital inflows despite muted crude Oil prices. •   Oil prices continue to face downward pressure, capping CAD strength as global growth concerns continue. Sentiment among investors has been greatly swayed by increased worry about the health of the US economy as recession and long-term inflationary fears continue to dominate market dialogue. The sense of uncertainty has been heightened following a sudden flare-up in the trade tensions between China and the United States after both nations increased tariffs on products from the other side. This has raised new concerns regarding the effect on worldwide growth and overall business sentiment, particularly following recent economic indicators to suggest softening consumer confidence and mixed messages from the labor market. CAD/USD DAILY PRICE CHART CHART SOURCE: TradingView Meanwhile, the Canadian Dollar has attracted some support as investors look for alternatives to the US Dollar amidst the uncertain economic environment. Still, there are challenges in the Canadian economy, mainly from muted Oil prices, which continue to be pressured by fears that if trade tensions continue, global demand might slow down. As markets wait for more news on trade talks and economic indicators, attention is fixed on how these wider risks will influence financial stability in the coming weeks. TECHNICAL ANALYSIS USD/CAD continues to exhibit bearish momentum as the pair extends its losing trend for the fourth session in a row. The price is still below crucial moving averages, which confirms persistent selling pressure. Unless the pair holds above the 1.3850 support area, it may create room for additional downside movement in the short term. Conversely, any recovery effort is bound to encounter resistance at the 1.3920–1.3950 level, as sellers are likely to return. In general, the technical configuration points towards prudence as the market awaits new drivers to dictate the next direction. FORECAST If optimism returns to the markets and the tensions over trade between the US and China relent, USD/CAD may recover in the near term. A recovery in US economic statistics or any indication of positive developments in talks may propel the US Dollar stronger, and the pair might again head toward resistance levels at 1.3920, possibly 1.3950. A pick-up in Oil prices or optimistic risk appetite also might support the Canadian Dollar along with overall market stability, giving rise to price fluctuations on the short-term in a balanced range. To its detriment, however, if recession concerns intensify and US economic reports continue to dismay, the USD/CAD exchange rate would continue to be under selling pressure. Falling through the 1.3850 support level may provoke further losses, leaving the pair vulnerable to the next psychological handle at 1.3800 or lower. Ongoing trade tensions, coupled with softer US consumer attitudes and inflation worries, would be expected to strengthen bearish momentum in the near term, curbing any significant attempts at recovery.

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