Pound Sterling Edges Higher Amid Growing Skepticism Over September Fed Rate Hike

The British Pound steadied against the US Dollar on Friday, but it is set to close the week with gains exceeding 1% as market participants grow doubtful that the Federal Reserve will lift rates at its September meeting. At the time of writing, GBP/USD hovered around 1.3350, showing little change for the session.

GBP/USD steadies as traders push Fed hike bets beyond September

The U.S. labor market stayed resilient even after June’s non‑farm payrolls figure came in below forecasts and was revised down for April and May, showing a net loss of 74,000 jobs over those two months. Market participants in mid‑June and sits beneath the key 200‑day simple moving average at 1.3399.

Despite Andy Burnham’s restated allegiance to the existing fiscal framework, market participants remain wary. Separately, The Independent noted that he is exploring an income‑tax relief aimed at easing younger buyers’ entry onto the housing ladder.

The UK’s S&P Global Services PMI slipped further in June, dropping from 49.3 to 48.8 as new orders contracted for the fourth straight month. Survey respondents highlighted ongoing cost pressures and weak consumer demand.

Looking ahead, the UK calendar includes remarks from Bank of England policymakers and the publication of the Financial Stability Report.

Fed and BoE interest rate expectations

Money‑market pricing implies a reduced probability of a Federal Reserve rate increase in 2026, with odds standing at 46% based on Prime Terminal data.

Meanwhile, futures markets assign a roughly 70% likelihood to a Bank of England rate hike by the close of 2026.

GBP/USD Price Forecast: Technical outlook

On the daily chart, GBP/USD is trading at 1.3354, remaining beneath a converging SMA cluster near 1.3409 that caps the pair in the short term. The price lies below this overhead SMA barrier and under a longer‑term descending trend line originating around 1.3520, making the recent bounce appear more like a corrective move within a still‑confined structure. The 14‑period Relative Strength Index hovers around 53, indicating modestly stronger momentum, yet insufficient to overcome the resistance above.

Upside resistance first appears at the SMA zone near 1.3409, followed by a stronger barrier at the descending trend line around 1.3520, where earlier advances have repeatedly found a ceiling. Downside, the primary support aligns with the long‑term upward trend line that springs from roughly 1.3159; a decisive break beneath that level could trigger a deeper retreat, even though momentum remains slightly positive.

(The technical analysis of this story was written with the help of an AI tool.)

(This story was corrected on July 3 at 16:44 GMT to say that money markets show a lower chance that the Fed will raise rates in 2026 instead of the Fed is not expected to raise rates this year.)

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