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16 September 2025,07:21
Daily Market Analysis
16 September 2025, 07:21
*GBP/USD climbed above 1.2600 to a two-month high as investors positioned ahead of the Fed’s policy decision.
*The last split vote (5 for a cut, 4 for no change) showed a more hawkish tilt than expected, offering support to the pound.
*UK unemployment data today and CPI on Wednesday will be pivotal for the BoE’s September 18 decision, likely fueling volatility in sterling.
The British pound has extended its advance against major currencies, with GBP/USD trading above the 1.2600 level—its highest in two months—as markets position for a widening monetary policy divergence between the Bank of England and the Federal Reserve. Sterling strength reflects a more hawkish-than-expected stance from the BoE’s latest meeting, where the Monetary Policy Committee split 5–4 in favor of holding rates, signaling reluctance to ease policy amid persistent inflation concerns.
The currency now faces a series of critical tests, beginning with today’s UK unemployment report. A reading at or below the 4.7% consensus is likely to reinforce expectations that the labor market remains tight, potentially providing further support for the pound.
Attention will then turn to Wednesday’s UK Consumer Price Index release, a key input for the BoE’s September 18 policy decision. A firm inflation print could solidify expectations that the bank will delay rate cuts, extending sterling’s gains. Conversely, a softer reading may temper hawkish sentiment.
Meanwhile, broader direction will also be influenced by the Fed’s FOMC decision on Wednesday. A dovish pivot from Chair Powell could weaken the dollar and amplify GBP/USD upside, while a more cautious tone may limit sterling’s advance.
Volatility is expected to remain elevated across sterling pairs this week as traders digest both domestic data and central bank guidance.
The GBP/JPY pair has broken decisively above the critical psychological resistance level of 200.00, a threshold that had capped upward moves since July. A sustained hold above this level would confirm a significant bullish shift in market structure and likely open the path toward further gains in the sessions ahead.
The breakout follows the pair’s earlier move above its descending trendline resistance near 198.80, which initiated a sequence of higher highs and higher lows—a pattern consistent with a strengthening uptrend. This technical improvement reflects underlying fundamental support, including widening interest rate differentials between the Bank of England’s relatively hawkish stance and the Bank of Japan’s persistently accommodative policy.
Momentum indicators are aligned with the bullish price action. The Relative Strength Index remains above its midline and is advancing toward overbought territory, indicating sustained buying pressure. Meanwhile, the Moving Average Convergence Divergence continues to trend higher above its zero line after finding support, confirming that bullish momentum is intact and likely to support further advances.
Resistance level:201.40, 202.55
Support level: 200.00, 198.95
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