Sterling stalls as dollar slips on Fed cut bets; GBP/USD eyes 1.3250 into ADP and ISM
The dollar’s broad retreat deepened as traders priced an almost certain Federal Reserve rate cut in December, lifting sterling before GBP/USD ran into strong resistance near 1.3250. Liquidity-sensitive moves are likely around this week’s ADP hiring data, ISM Services PMI and jobless claims, with markets laser-focused on the FOMC decision and the subsequent NFP and CPI prints.
Market overview
The greenback remains under pressure after dovish-leaning remarks from Fed officials spurred wagers on an imminent policy pivot. Fed-dated pricing now implies roughly an 87% probability of a December rate cut, leaving the dollar vulnerable to softer data and lower front-end yields. Absent a heavy data slate ahead of the FOMC, sentiment is being steered by high-frequency labor signals and services activity, while volatility stays elevated across FX as positioning adjusts.
In the UK, the market leans decisively toward easing. Traders assign about a 90% chance of a Bank of England cut this month and discount roughly 62 bps of cumulative easing by end-2026 after a run of softer UK data. The Autumn Budget was initially welcomed, supporting sterling, though gains faded as broader dollar dynamics and rate expectations reasserted themselves.
Market snapshot
- Fed cut odds for December near 87%, pressuring the dollar as front-end yields ease.
- Sterling supported by fiscal clarity but capped by BoE easing expectations and key technical resistance.
- GBP/USD rejected around 1.3250; intraday bias cautious ahead of ADP and ISM Services PMI.
- Upcoming catalysts: ADP, ISM Services, weekly jobless claims, University of Michigan sentiment.
- Focus beyond this week: FOMC decision, then NFP and CPI for confirmation of the policy path.
GBP/USD technical picture
Daily timeframe
GBP/USD failed to clear the 1.3250 resistance zone and slipped, reinforcing the level as a ceiling. A sustained break above 1.3250 would expose the next topside target near 1.3370. Failure to break could keep price action contained, with sellers eyeing a drift back toward rising trend support on the daily chart.
4-hour timeframe
The pair has broken below an intraday uptrend line, opening room for a deeper pullback toward 1.3125. Bulls are likely to defend that area with stops below, aiming for a rebound into 1.3250. A clear move under 1.3125 would embolden bears toward the next support band around 1.3070.
1-hour timeframe
With short-term momentum tilting lower, sellers may fade rallies toward the recent swing high at 1.3220, seeking a better risk-reward for shots back to 1.3125. A decisive push above 1.3220—and ultimately 1.3250—would negate the near-term bearish bias and re-open the topside toward 1.3370.
Macro drivers and positioning
FX volatility remains sensitive to incremental data surprises. A soft ADP print and cooling ISM Services prices would likely keep the dollar on the back foot by reinforcing an earlier and gentler Fed trajectory. Conversely, any upside shock in hiring or services inflation could deliver a fleeting USD reprieve, especially if 2-year yields bounce. Sterling’s path is complicated by BoE easing expectations: without a hawkish pushback from policymakers or upside UK surprises, rallies may struggle beyond technical resistance in the short run.
What’s next on the calendar
- US ADP Employment
- US ISM Services PMI
- US Weekly Jobless Claims
- University of Michigan Consumer Sentiment
Beyond the immediate releases, markets will key in on the FOMC policy announcement, then the NFP and CPI prints to calibrate the speed and scale of 2025 easing. As positioning turns more two-way into event risk, traders should expect choppier price action around 1.3125–1.3250 in GBP/USD.
FAQ
What is driving GBP/USD right now?
Fed rate cut bets are pushing the dollar lower, while BoE easing expectations cap sterling. The tug-of-war leaves GBP/USD tracking global yields and incoming US data, with 1.3125–1.3250 defining near-term ranges.
Which data releases matter most this week for FX?
US ADP Employment, ISM Services PMI, weekly jobless claims and the University of Michigan sentiment survey. These will shape expectations ahead of the FOMC, followed by NFP and CPI.
What are the key technical levels for GBP/USD?
Resistance sits at 1.3220 and 1.3250. Support is seen at 1.3125, then 1.3070. A break above 1.3250 targets 1.3370; a break below 1.3125 exposes 1.3070.
How do Fed cut odds affect the dollar?
Higher odds of near-term Fed easing typically pull US front-end yields lower, undermining the dollar. If those odds fall on stronger data, the USD can see a short-term bounce.
What’s the BoE outlook and its impact on sterling?
Markets price a high chance of a BoE cut this month and around 62 bps of total easing by end-2026. That expected easing limits sterling’s upside unless UK data or BoE guidance turns more hawkish.
Is now a high-volatility period for FX?
Yes. With event risk clustered and policy pivots in play, liquidity conditions can tighten around releases, amplifying moves. Traders should expect wider intraday swings in pairs like GBP/USD.
Reporting by BPayNews.
