• US Dollar slips from YTD highs as Fed repricing cools.
• Burnham fiscal-rule pledge helps calm UK political nerves.
• NFP, UK GDP and Warsh testimony anchor next week.

The Pound Sterling gains 0.20% against the Greenback as the latter recoils after hitting year-to-date (YTD) highs, with money markets pricing in a less hawkish Federal Reserve, despite policymakers stating they will focus on inflation. The GBP/USD trades at 1.3217 after reaching a daily low of 1.3180.

GBP/USD rebounds as Fed bets cool and UK politics stabilize

Cable is set to end the week with modest losses of 0.15%, despite the ongoing political turmoil, which was tempered by UK Prime Minister Keir Starmer's resignation. Signs of an orderly transmission to a new PM – the seventh in 10 years, with the race led by Andy Burnham, who is the only declared candidate to succeed Starmer.

On May 14, Burnham announced his intention to contest a parliamentary seat to challenge Starmer, sparking broad GBP weakness and sending GILTS yields higher. This amid growing speculation that his “business-friendly socialism” will increase spending and borrowing, at a time when the budget is walking a tightrope.

Lately, his team said he would adhere to the current Chancellor, Rachel Reeves, fiscal rules, which calmed markets.

Traders eye one rate hike by the BoE

Aside from this, expectations that the Bank of England (BoE) will increase rates in 2026 have trimmed sharply. A week ago, investors expected 33 basis points (bps) of tightening, but as of writing, they had priced in 21 bps, according to Prime Terminal data.

Across the pond, the US economic docket was packed during the week, ending with the release of the US Consumer Sentiment by the University of Michigan, which improved in June. The index rose from 48.9 preliminary reading for June to 49.5, also exceeding May’s print of 44.8.

Further insights on consumers revealed that higher costs of living are projected as inflation expectations for one year were unchanged at 4.6% and for five years at 3.3%, down from 3.4% in the previous reading.

In the meantime, the US Dollar Index (DXY), which measures the performance of the American currency against the other six currencies, is down 0.18% to 101.25.

Minneapolis Fed President Neel Kashkari said the Fed may need to raise rates due to broad inflation in a Bloomberg interview.

What’s in the economic calendar for the UK and US, next week?

In the UK, the docket will feature GDP figures and speeches by BoE officials. In the US, Nonfarm Payrolls are eyed, followed by Fed Chair Kevin Warsh's speech at the US Congress and the ISM Manufacturing PMI.

GBP/USD Price Forecast: Technical Outlook

In the daily chart, GBP/USD trades at 1.3218, holding a bearish near-term bias as spot remains below the simple moving average triple cluster (50, 100 and 200) around 1.3431. The pair has slipped away from the former rising support line that began near 1.3159, while the break levels at 1.3454 and 1.3535 on the respective uptrend and downtrend lines sit well overhead, hinting that the recent push lower is still unfolding. The Relative Strength Index (14) at around 38 stays below the midline, suggesting subdued bullish momentum rather than a clear oversold condition.

On the topside, initial resistance emerges at the 1.3431 area defined by the clustered simple moving averages, with further barriers at the former uptrend break near 1.3454 and the downward resistance trend-line break level around 1.3535. On the downside, immediate focus sits on the current trading band near 1.3218, with the prior trend-line origin at 1.3159 offering the next notable support zone should selling pressure extend.

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