GBP/USD hit 1.3550 on broad USD weakness but retraced most gains as sterling lacked domestic drivers ahead of key jobs data.
GBP/USD spiked to 1.3550, its highest level in three months, as the Dollar Index broke below its 200-day EMA to a June low. The move was driven entirely by USD selling, with sterling contributing no domestic catalysts, and the pair closed with a net gain of under 10 pips.
The broader market saw the euro and gold rally alongside sterling, signaling a USD-led move rather than individual currency strength. Fed rate cut expectations for September rose, with futures pricing odds dropping from 50% to roughly a third over the past week. Geopolitical tensions in the Strait of Hormuz also weighed on sentiment, pushing crude oil up 3% and the 30-year Treasury yield to 5.31%, its highest since June 2007.
Sterling’s next test comes with Tuesday’s UK labor market report, where unemployment is expected to ease to 4.8% while claimant count change nearly doubles to 11.2K from 6.7K in June.