• GBP/USD retreated towards the 1.2670 area, below the 20-day SMA.
• Core PCE from July rose to 3.3%, matching expectations.
• Focus shifts to Friday’s NFPs, expected to have decelerated to 170k.

On Thursday, the GBP/USD lost ground as the USD traded strongly against most of its rivals after the release of July's Core Personal Consumption Expenditures (PCE) figures. The GBP’s losses are limited by tightening expectations on the Bank of England remaining high.

Core PCE rose in July, and Jobless Claims decelerated at the end of August

The Core PCE from July came in at 3.3%, up from its previous 3% and matched the consensus. In addition, the US reported that the Jobless Claims for the week ending in August 25 decelerated to 228,000, vs the 235,000 expected and the previous 232,000 and hinted at some resilience of the labour market after the US reported soft employment figures on Tuesday. 

All eyes are now on the Nonfarm Payrolls (NFP) report from August from the US to be reported on Friday, which will likely cause market volatility as that report is the ultimate gauge of the US labour market situation. As the Federal Reserve (Fed) expects a cooling labour market, its outcome will help investors place bets on the next decisions. 

On the GBP’s side, no relevant data was released, but its losses are limited by the tightening expectations of the Bank of England (BoE), and markets still bet on a terminal rate between 5.75%-6% for this cycle.

 GBP/USD Levels to watch 

 Based on the daily chart, GBP/USD maintains a neutral technical perspective as indicators send mixed signals. The Relative Strength Index (RSI) displays a negative slope in the bullish territory, hinting at a potential shift in momentum, while the Moving Average Convergence (MACD) displays shorter red bars. Moreover, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, indicating a favourable position for the bulls in the bigger picture.

 Support levels: 1.2645 (100-day SMA), 1.2600, 1.2550.

 Resistance levels: 1.2700 (20-day SMA), 1.2730, 1.2750.

 GBP/USD Daily Chart