GBP/USD remains stable at around 1.3500 on Tuesday amid reports of a possible end to the war between Ukraine and Russia. At the same time, traders are awaiting UK inflation data, the minutes of the Federal Reserve’s July meeting and Fed Chair Jerome Powell’s speech at Jackson Hole.
The pound stabilises as traders await UK inflation data and Powell’s speech at Jackson Hole Geopolitical events are cheering investors, and the pound sterling is erasing some of its earlier losses.
Last Friday’s meeting between Trump and Putin laid the groundwork for Monday’s summit between Washington and European leaders, including Ukrainian President Volodymyr Zelensky. Sky News Arabia recently reported that Putin had proposed a possible meeting with Zelensky in Moscow. A Fed official recently made headlines as traders braced for Powell’s speech at Jackson Hole.
US Federal Reserve Governor Michelle Bowman said her views had not changed, forecasting three rate cuts in 2025, and stressed that the Fed should focus more on its employment mandate. In terms of data, the number of housing starts in the US rose by 5.2% in July, from 1.321 million to 1.428 million, exceeding forecasts of a decline to 1.3 million.
In contrast, building permits for the same period fell from 1.393 million to 1.354 million. On the other side of the Atlantic, market participants are focused on the release of July inflation data.
The consumer price index (CPI) in the UK is expected to come in at 3.7%, while the CPI for services is expected to rise by 4.8%. Although inflation data could undermine the Bank of England’s (BoE) chances of continuing its policy easing, the latest Reuters poll showed that economists forecast the bank rate to be 3.75% by the end of 2025, meaning they are pricing in another 25 basis point (bp) cut by the end of the year.
GBP/USD price forecast
Technical review The GBP/USD uptrend has paused but remains supported by the 50-day simple moving average (SMA) at 1.3497. The relative strength index (RSI) is bullish but remains flat. This indicates that the pair may trade sideways.
If the pair rises above the 18 August high of 1.3565, expect it to test the 1.3600 level. Otherwise, if GBP/USD falls below 1.3500, the first support will be the 50-day SMA, followed by the 20-day SMA at 1.3416, before the 1.3400 level.
