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The GBP/USD faces a pivotal week and ahead of it, the pair continues to break important short-term technical levels. With the dollar coming under pressure from expectations of interest rate cuts, the cable is likely to remain in an upward trajectory unless we see super-hot inflation data out of the US this week. Today however, it was off its best levels despite the BLS revising its US annual benchmark payrolls by a record -911K for March 2025.

What to watch next?

Attention will now turn to upcoming US inflation data. For the pound dollar rate, we will also have UK GDP figures, which could set the tone for the next directional move. Ahead of these, markets will closely watch today's US payroll revisions. The Bureau of Labor Statistics will issue its preliminary benchmark revision to payrolls for the year through March. Many analysts expect this to show another downward revision to March payrolls. If so, this would suggest the jobs market was softening well before the latest batch of weak job growth. Therefore, while the data is backward-looking, any big revisions will matter – in both directions. 

Thursday’s CPI release is the bigger test for the dollar with the Dollar Index under pressure: A softer print would bolster bets on multiple rate cuts, while an upside surprise could give the dollar a short-lived lift. CPI is expected to have climbed 0.3% month-on-month, lifting the year-over-year rate to 2.9% from 2.7%. With Powell signalling at Jackson Hole that labour market risks now outweigh inflation concerns, it would likely take an unusually hot CPI and PPI print (released a day before) to shift the Fed’s current dovish tilt.

UK data is relatively light until Friday, when GDP, industrial output, and construction figures are due. Recent upbeat data, including stronger retail sales and a services PMI upgrade, support a resilient UK recovery, potentially lending sterling further strength.

Technical analysis: GBP/USD breaks out

From a technical perspective, the GBP/USD continues to print bullish price action. Last week it climbed back above 1.3500, buoyed by a weak US jobs report that reinforced expectations of a September Fed rate cut. Now it has broken its short-term bearish trend and the next resistance at 1.3550. A breakout above 1.3600 now looks increasingly likely, targeting the summer highs just beneath the 1.38 handle. 

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