GBP/USD holds above 1.3479 after a bullish breakout that followed last week's US jobs report, keeping sterling on a short-term uptrend. The upcoming US CPI print is now the swing factor, with Fed funds futures pricing a near coin-toss chance of a September rate hike.
GBP/USD trades firm above 1.3479, extending a short-term uptrend after clearing a medium-term descending trendline in the wake of the US non-farm payrolls release. Sterling has been one of the best-performing major currencies against the US dollar over the past five trading sessions. The pound has gained 0.38% against the dollar over that stretch. That edges out USD/CAD's 0.56% loss over the same period.
Inflation data will decide the next move
Market sentiment stays tied to incoming inflation data as traders weigh whether the Federal Reserve will resume rate hikes later this year. Following mixed labour-market signals, Fed funds futures now price a 48.1% chance of a 25-basis-point hike at the September FOMC meeting, down from around 70% a week ago, according to the CME FedWatch tool.
A hotter-than-expected core inflation reading above 2.5% year-over-year, driven by core goods price pass-throughs, would likely trigger a hawkish repricing in US short-term Treasury yields and a tailwind for the dollar, exposing GBP/USD to a drop toward the 1.3400 level, near its 20- and 200-day moving averages. A softer core reading at or below 2.5%, confirming easing services inflation and shelter costs, would instead give the Fed room to hold, and could push GBP/USD toward multi-month highs.
Chart points to a bullish channel above 1.3479
GBP/USD has cleared a significant medium-term hurdle after a bullish breakout following Friday's US jobs release, moving above its former descending trendline resistance from the 28 January 2026 high, also a 52-week high. It continues to oscillate within a minor ascending channel in place since the 29 July 2026 low of 1.3279, with bullish momentum on the hourly RSI.
Holding above 1.3479 as a key short-term pivotal support keeps intermediate resistances at 1.3547, 1.3580 and 1.3643 in play, the last also a Fibonacci extension level. An hourly close below 1.3479 would invalidate the bullish move and expose supports at 1.3440 and 1.3400.
Source: ActionForex
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