Pound to Dollar Technicals "Looking More Worrisome" After Latest Pullback

The Pound US Dollar exchange rate lost ground against the US Dollar on Tuesday despite the release of some underwhelming US labour data.

At the time of writing, GBP/USD was trading at approximately $1.3314, down roughly 0.3% from the start of Tuesday’s session.

The US Dollar (USD) advanced on Tuesday, shrugging off a weaker-than-expected JOLTs job openings report.

Data showed that vacancies fell to 7.437 million in June, missing forecasts of a drop to 7.55 million, highlighting the cooling in the US labour market.

Despite this, the ‘Greenback’ continued to gain ground, buoyed by a cautious market mood.

The recent EU-US trade agreement saw investors favour safe-haven assets, helping the US Dollar push higher against most of its major counterparts.

The Pound (GBP) traded without a clear sense of direction on Tuesday as a lack of UK economic news left the currency adrift.


In the absence of any major domestic drivers, the Pound was steered by broader risk trends.

As investors favoured safer assets, this pressured GBP lower against traditional safe-haven currencies such as the US Dollar (USD).

However, the Pound managed to hold its ground against more risk-sensitive peers, as appetite for high-risk currencies waned.


The Federal Reserve’s latest interest rate decision is set to be the main driver of GBP/USD movement on Wednesday.

While the Fed is widely expected to hold rates steady this month, investors will be closely analysing the central bank’s tone for clues about the future path of monetary policy, and any hawkish signals could propel the US Dollar higher.

Ahead of the decision, markets will also digest the US core PCE price index, the central bank’s preferred inflation gauge.

The annual reading is forecast to hold at 2.7%, which may reinforce expectations that interest rates will remain elevated for longer, lending additional support to USD in early trade.


Meanwhile, with no major UK data scheduled for release, the Pound is likely to remain directionless.

In the absence of domestic drivers, GBP movement will largely depend on broader market sentiment and external cues throughout the mid-week session.

According to FX strategists at Scotiabank, "GBP’s technicals are looking somewhat more worrisome following the latest pullback."

"The latest lows extended marginally below the mid-July support area in the mid-1.33s, opening up the potential for a shift in trend.

"Renewed gains toward 1.34 would allow for a return to a more neutral view, while a break to fresh lows targeting 1.33 would shift our outlook in a more bearish manner."

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