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GBP/USD Breaks Above 1.3550 As Fed Cut Speculation Increases and BoE Rate Expectations Change

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  • September 9, 2025
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GBP/USD rose higher than 1.3550 in early European morning on Tuesday, hitting a high since mid-August, as softer US jobs data sustained hopes of more Federal Reserve rate cuts. Traders are looking forward to the upcoming Nonfarm Payrolls Benchmark Revision, which may unveil massive downward revisions in employment data and place additional pressure on the US Dollar. While this, the Pound Sterling gained strength after HSBC and Deutsche Bank adjusted their expectations, delaying Bank of England rate cuts, which indicated UK rates could stay higher for the foreseeable future. KEY LOOKOUTS • Markets look for confirmation of potential revisions downwards of as much as 800,000 jobs, possibly redrawing Fed policy expectations. • Traders are pricing in an 89.4% probability of a 25 bps reduction and a 10.6% likelihood of a jumbo 50 bps reduction at the September meeting. • HSBC and Deutsche Bank extend their rate cut expectations, indicating UK rates might remain higher for longer. • The pair trades around 1.3560, its highest since Aug 15, with further upside relying on US labor market data and central bank cues. GBP/USD continued its rise above 1.3550 during early European trading on Tuesday, buoyed by a weakening US Dollar as markets expect more profound Federal Reserve rate reductions in the aftermath of weak US labor market reports. Investors now wait for the Nonfarm Payrolls Benchmark Revision, which may show a steep downward revision of jobs and further dampen the USD. In contrast, Sterling’s strength is supported by expectations of a delayed rate cut by the Bank of England, with HSBC and Deutsche Bank taking their forecasts further out in line with this, indicating UK monetary policy may stay tighter for longer. GBP/USD is trading around 1.3560, its strongest level since mid-August, as US Dollar bears are weighed down by Fed rate cut bets. US NFP Benchmark Revision is due out later, while delayed BoE rate cut hopes are supporting Sterling. • GBP/USD rises above 1.3550, its highest since August 15. • Disappointing US labor data puts pressure on the Federal Reserve to provide rate cuts. • There is a 89.4% probability of a 25 bps cut and a 10.6% probability of a 50 bps cut in September. • Tuesday’s US NFP Benchmark Revision could reveal a reduction of as much as 800,000 jobs. • Increasing US unemployment points to weakening labor market conditions. • HSBC now forecasts the Bank of England to keep rates on hold until April 2026, reversing previous cut projections. • Deutsche Bank extends its call for the next BoE rate cut to December from November. The GBP/USD currency pair is in focus as it trades close to multi-week highs supported by differing monetary policy expectations at the Federal Reserve and Bank of England. Weaker US labor market indicators have spurred rumors that the Fed will have to be more forceful in loosening monetary policy, with eyes on the forthcoming Nonfarm Payrolls Benchmark Revision that might show large job losses. Such a revision would add to fears that the US economy is decelerating more than initially anticipated, placing greater emphasis on demands for deeper rate cuts. GBP/USD DAILY CHART PRICE SOURCE: TradingView On the UK side, the interest rate outlook has changed after significant banks updated their estimates. HSBC now predicts the Bank of England to keep rates unchanged through 2026, away from previous estimates of quarterly reductions, while Deutsche Bank has delayed its next rate cut prediction to December. These delays are an indication of optimism that the BoE will keep inflation control as a priority for longer, as against expected Fed easing on the quick side. This policy divergence is tightening demand for the Sterling and influencing investor sentiment on the GBP/USD pair. TECHNICAL ANALYSIS GBP/USD is holding up around the 1.3550 support level, reflecting strong bullish momentum after it recovered levels not seen since mid-August. A persistent break above 1.3560 would set the stage for a further move to challenge the 1.3600 psychological level, and any retreat will find initial support around 1.3520. The overall setup indicates that buyers are in the driving seat as long as the pair hovers above its short-term support levels, with the next directional move likely to be driven by coming US labor releases. FORECAST If the US Nonfarm Payrolls Benchmark Revision reaffirms large-scale job losses and markets become increasingly bullish about aggressive Fed rate cuts, GBP/USD may be able to push higher above 1.3560. A definitive break above this area could set the stage for 1.3600 and beyond, as the Pound remains supported by hopes that the Bank of England will postpone monetary easing. Buyer sentiment towards Sterling may keep the currency pair on a bullish path in the short term. Conversely, if the revision in labor markets proves to be less harsh than thought or if Fed officials resist hugely bet-on rate cuts, the US Dollar may regain its footing, restraining GBP/USD’s appreciation. In that scenario, the pair could experience pressure towards the 1.3520–1.3500 support area. Any meaningful break below these levels would restore market risk sentiment against the Dollar and set up the possibility of larger corrective falls.

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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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