GBP/USD Dips as Dollar Gains; Eyes on US Data, BoE
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GBP/USD Dips as Dollar Gains; Eyes on US Data, BoE
GBP/USD declined after gaining and is traded around 1.3520[1] during the Asian session on Tuesday as the US dollar continues to appreciate. It is believed that the Dollar[2] has been supported by the current inflation concern in the US and thus the investors are not certain of whether the Federal Reserve will make any further reduction in the Federal Reserve rate. Global investors point out that everyone is now awaiting the publication of the August ISM Manufacturing PMI[3] report later in the day, which may affect future market actions and give the currency pair a new run.
This week, traders will be keen on the next labour market statistics, which can affect the US Federal Reserve[4] policy rule in September. Key reports[5] to watch are the ADP Employment Change, Average Hourly Earnings and the Nonfarm Payrolls of August. Global commentators[6] note that these statistics are essential in determining how well the employment sector and wages are performing and are important in defining how the Fed views interest rates and the general direction monetary policy should take.
It is believed that the downside risk for the GBP/USD pair looks limited as the US Dollar may remain under pressure, with growing expectations of a Federal Reserve[7] rate cut at September’s meeting. According to the CME FedWatch tool[8], markets are now pricing in more than an 89% probability of a 25 basis point cut, compared with 84% just a week ago. Global reports[9] believe that this shift highlights increasing confidence that the Fed will move towards easing policy, weighing further on the dollar’s outlook.
With the Parliament[10] going back after its summer holidays, traders are concerned about when the Autumn Budget will take place. Global reports[11] indicate that close attention will be paid to the questioning of Bank of England policymakers by the Treasury Committee, as markets seek clear signals on the future policy outlook and potential changes in the Bank's strategy.
The Pound Sterling (GBP) is believed to gain new strength against the US Dollar (USD) when expectations of further Bank of England (BoE)[12] rate cuts are relieved due to the current inflationary pressures in the UK. This opinion is confirmed by recent remarks of a BoE Monetary Policy Committee (MPC) member Catherine Mann[13]. She stressed that it is important to keep interest rates constant over a longer period to protect against the risks of ongoing inflation, as the central bank could delay further reductions, which would provide a lifeline to the Pound.
USD/JPY Steady Near 148.00 as BoJ Rate Hike Doubts Linger
Japanese Yen (JPY) was seen under selling pressure during early trading in Europe on Tuesday. Meanwhile, a slight bounce in the US Dollar (USD) assisted in pushing the USD/JPY pair to trade around 148.00[14] over the last hour. Uncertainty on the market about when the Bank of Japan (BoJ)[15] will increase interest rates once again is said to have contributed to the weak yen. In the meantime, the strong sentiment in Asian equity markets is diminishing the need to use the Yen as a safe haven[16], which is further burdening the currency.
There are increasing opinions that the Bank of Japan (BoJ)[17] will stick to its course of policy normalisation which might provide some support to the yen. Meanwhile, there is mounting speculation that the US Federal Reserve[18] will act to lower interest rates this month. Some reports[19] cite this as a reason as to why they expect this to put a curb on any significant appreciation of the US dollar and ensure that this currency does not appreciate significantly. Consequently, the risks associated with the downside of the yen are more contained, implying that USD/JPY bulls should exercise caution before the next set of US economic data[20] is released.
It is noted that USD/JPY has been moving slightly upwards in the last three days and is already showing support at 146.70[21], the lower limit of a 4-week trading range. This level is believed to be one of the major pivots now. Global commentators[22] indicate that a definite descent below it may drive prices to the August low of about 146.20 and then probably 146.00. It would have given new momentum to those who want to be bearish traders should the selling pressure be prolonged, which would pave way to even harsher falls. On the other hand, the pair might seek to stabilise as long as 146.70[23] is maintained, but a continued decline below would tip the momentum squarely on the seller’s side.
Conversely, the investors[24] believe that the additional increase can probably attract new vendors and will probably remain restricted beneath the 148.00 mark, which is the peak of a trading round that has been in existence over the course of weeks. Provided the two may maintain above this point, it may signal a short-covering rally to the recent high point of 148.75 to 148.80[25]. Some analysts[26] point out that the region is near the 200-day Simple Moving Average (SMA). An upside move greater can boost further sales, to the benefit of USD/JPY bulls in the short term.
NZD Steady on China's PMI Boost Amid US Tariff Uncertainty
The NZD/USD pair stayed steady and traded around 0.5905[27] at early Asian trading on Tuesday. It is believed that the Kiwi was boosted by the positive August Caixin Manufacturing PMI[28] results in China. Global commentators note that investors watch closely the next US ISM Manufacturing PMI[29], scheduled in August and to be released later today, which might indicate the next direction the market takes.
On Friday, the US Commerce Department[30] announced that inflation gauged using the Personal Consumption Expenditures (PCE) increased in July. This, according to global reports[31], indicates that US President Donald Trump is feeding off the American economy with his tariffs. Nonetheless, it is common knowledge in the markets that the Federal Reserve[32] will further reduce its benchmark interest rate this month in a bid to boost growth. It is believed that this would put a burden on the US Dollar[33] which may be weaker. To currency traders, this could give the pair a boost and provide possible upward momentum.
The Manufacturing PMI in China rose to 50.5 in August, compared with 49.5 in July, global reports[34] stated on Monday. Commentators[35] believe that the outcome was higher than the projected 49.5, indicating that there was an increase in economic activity. These optimistic figures[36] give a lift to the New Zealand dollar, which is commonly regarded as an indicator of the Chinese economy, as New Zealand has strong trade connections with its biggest partner. Some reports[37] point out that the report was encouraging and was received with pleasure by investors.
Global commentators point out that continuous uncertainty in trade may influence the limit gains on the New Zealand Dollar (NZD)[38], and investors fear uncertainty. It is also noted that there is a lot of focus on matters related to US tariffs[39]. On Friday, the US Court of Appeals in the Federal Circuit upheld a decision that rejected the broad tariffs that were imposed on most nations by President Donald Trump[40]. These measures were found to be unlawful by the court, and their futures were put into doubt. It is expected[41] that traders will be closely observing because any actions or decisions about changes in tariffs will directly affect the global markets and the global currencies.
Global reports[42] point out that the ruling affects Trump's so-called "reciprocal" tariffs around the world, including extra duties imposed on China, Mexico, and Canada, affecting trade relations and putting pressure on international economic ties.
USD/CAD Gains Limited as Fed Cut Hopes Weigh Market Sentiment
USD/CAD had extended its gains in the second consecutive session and traded near 1.3750[43] on Monday during the Asian hours. The pair is said to be underpinned by a stronger US Dollar, with traders absorbing the news of Friday’s US Personal Consumption Expenditures (PCE) Price Index[44], which indicated continuing inflationary pressures and higher risks of potential interest rate cuts. It additionally states that the focus has switched to the August ISM Manufacturing PMI[45], which will be issued later in the day but will likely provide further indicators on the economy's outlook and may influence future Federal Reserve policy expectations.
The positive outlook for the USD/CAD pair is believed to be limited as the US Dollar is under pressure due to rising expectations of a Federal Reserve[46] rate cut in September. Market sentiment[47] indicates that the Fed is likely to reduce interest rates, with traders currently assigning a 40% chance of a 25-basis point cut at the upcoming meeting next month. However, this represents a decline from the 84% probability a week ago, according to the CME FedWatch tool. Consequently, the strength of the Dollar may be questioned in the short term.
The traders are also monitoring the figures of the upcoming US labour[48] market this week that will potentially inform the Federal Reserve on the decisions they make in September. Releases that are significant are ADP Employment Change, Average Hourly Earnings, and August Nonfarm Payrolls. Some analysts[49] expect such reports to impact expectations about interest rates and Fed policy in future.
It is noted that the Canadian Dollar[50] is under strain because the domestic economy is slowing further than anticipated and is being battered by a trade feud with the United States and increased tariffs under President Donald Trump. According to statistics Canada, the economy dropped by 0.4% in the second quarter, exports and business investment were very weak. Some analysts[51] indicate that the recession has made markets believe that the bank of Canada will reduce interest rates earlier than even expected as the policymakers consider how best to spur growth amidst increasing external and internal problems.
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References: [1] https://www.tradingview.com/chart/?symbol=OANDA%3AGBPUSD
[2] https://www.fxstreet.com/currencies/us-dollar-index
[3] https://tradingeconomics.com/united-states/manufacturing-pmi
[4] https://www.federalreserve.gov/newsevents/2025-september.htm
[5] https://www.usa.gov/agencies/bureau-of-labor-statistics
[7] https://www.forbes.com/sites/simonmoore/2025/08/05/fed-expected-to-cut-interest-rates-in-september/
[8] https://www.investopedia.com/cme-fedwatch-tool-7559817
[10] https://www.ey.com/en_uk/budget
[12] https://equalsmoney.com/economic-calendar/events/boe-interest-rate-decision
[13] https://www.reuters.com/world/uk/bank-englands-mann-sees-case-persistent-hold-rates-2025-08-26/
[14] https://www.tradingview.com/chart/?symbol=OANDA%3AUSDJPY
[16] https://www.ebc.com/forex/safe-haven-currencies--why-jpy-chf-and-usd-lead
[18] https://money.com/fed-rate-cut-september-experts-predict/
[19] https://www.thestreet.com/fed/fed-official-sends-bold-5-word-message-on-september-interest-rate-cuts
[21] https://tradingeconomics.com/usdjpy:cur
[22] https://www.mitrade.com/insights/forex-analysis/jpy/fxstreet-USDJPY-202509011124
[24] https://www.mitrade.com/insights/forex-analysis/jpy/fxstreet-USDJPY-202509021106
[25] https://www.mitrade.com/au/insights/news/live-news/article-1-1032226-20250812
[26] https://www.mitrade.com/insights/forex-analysis/jpy/fxstreet-USDJPY-202509021106
[27] https://www.tradingview.com/chart/?symbol=OANDA%3ANZDUSD
[28] https://tradingeconomics.com/china/manufacturing-pmi
[29] https://tradingeconomics.com/united-states/manufacturing-pmi
[30] https://www.investopedia.com/pce-inflation-july-11800323
[32] https://equalsmoney.com/economic-calendar/events/fed-interest-rate-decision
[33] https://www.morningstar.com/markets/when-will-fed-start-cutting-interest-rates
[34] https://tradingeconomics.com/china/manufacturing-pmi
[35] https://tradingeconomics.com/china/manufacturing-pmi
[36] https://www.mitrade.com/insights/news/live-news/article-1-1086744-20250902
[37] https://tradingeconomics.com/china/manufacturing-pmi
[38] https://www.mitrade.com/insights/news/live-news/article-1-1086744-20250902
[39] https://www.bbc.com/news/articles/ckgj7jxkq58o
[40] https://www.cbsnews.com/news/trump-tariffs-federal-appeals-court-rules-illegal-what-happens-next/
[41] https://www.bbc.com/news/articles/cn93e12rypgo
[43] https://www.tradingview.com/chart/?symbol=OANDA%3AUSDCAD
[44] https://www.bea.gov/data/personal-consumption-expenditures-price-index-excluding-food-and-energy
[45] https://tradingeconomics.com/united-states/manufacturing-pmi
[46] https://www.investopedia.com/fed-chair-powell-keeps-september-rate-cut-on-the-table-11795858
[47] https://www.forbes.com/sites/simonmoore/2025/08/05/fed-expected-to-cut-interest-rates-in-september/
[48] https://www.bea.gov/news/schedule
[49] https://www.ainvest.com/news/assessing-likelihood-impact-fed-september-2025-rate-cut-2509/
[50] https://globalnews.ca/news/11355608/canada-gdp-june-2025/
[51] https://equalsmoney.com/economic-calendar/events/boc-interest-rate-decision
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