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Fibonacci Zone Could Trigger a Shift Back to the Downside
Central Bank
Economic
Summary:
This pattern suggests bullish momentum could be waning as the pair nears overbought conditions.
Sell
CLOSEDGBPUSD
End Time
1.34997
Entry Price
1.31600
TP
1.36500
SL
1.34899 -0.00216 -0.16%
292
Points
Profit
1.31600
TP
1.34705
CLOSING
1.34997
Entry Price
1.36500
SL
US Treasury Secretary Scott Bessent gave an interview to Fox Business on Tuesday night, addressing a broad range of domestic and international policy matters. According to Bessent, upcoming U.S. Supreme Court rulings on tariffs could be influenced by the projected revenue such measures would generate. He also noted that U.S. President Donald Trump and Chinese President Xi Jinping maintain a “good relationship” and suggested that the Federal Reserve (Fed) should consider delivering a double rate cut at its September 17 meeting.
Bessent remarked that the Fed could have acted earlier, potentially cutting rates in June if more accurate data had been available. He added that President Trump remains open-minded regarding the next Fed chair and expressed the administration’s desire to appoint someone capable of “revitalizing” the institution, underscoring what he described as a “fundamental problem” within the central bank.
On trade, Bessent highlighted that India has been somewhat resistant in ongoing negotiations, while talks with China are progressing through several key variables. He reaffirmed Trump’s strong rapport with President Xi and noted that U.S. and Chinese officials are expected to meet again within the next two to three months. However, Bessent stressed that any easing of Chinese tariffs would require sustained progress—potentially months or even a year—on curbing fentanyl flows.
Separately, Kansas City Fed President Jeffrey Schmid stated on Tuesday that the mild inflationary effect of tariffs should be viewed as evidence that monetary policy is “appropriately calibrated,” rather than as a justification for immediate rate cuts.
Fresh figures from the U.S. Bureau of Labor Statistics showed that headline Consumer Price Index (CPI) rose 0.2% month-over-month in July, matching expectations and slowing from June’s 0.3% gain. On an annual basis, headline inflation remained steady at 2.7%, slightly below the 2.8% consensus forecast. Core CPI, which excludes volatile food and energy prices, increased by 0.3% m/m and 3.1% y/y—both above expectations. While the stronger core reading tempered the dovish narrative somewhat, market attention largely focused on the softer headline data and the broader disinflationary trend.
Following the release, CME’s FedWatch tool indicated a 94% probability of a 25-basis-point rate cut in September, up from 84% before the data.
In the UK, the Office for National Statistics reported that Average Earnings excluding bonuses rose 5.0% y/y, matching both forecasts and the previous reading. Including bonuses, wage growth slowed to 4.6% from 5.0%, falling short of the expected 4.7%. The Claimant Count fell by 6,200 in July, defying expectations for a 20,800 increase, after a prior gain of 15,500. The claimant rate held steady at 4.4%. Employment growth surprised to the upside, with 239,000 jobs added in the three months to June, up from 134,000 previously. However, the ILO Unemployment Rate stayed at 4.7%, its highest level since mid-2021, signaling persistent slack in the labor market despite robust wage growth.
The Bank of England cut its benchmark rate by 25 basis points to 4.00% in August, with policymakers opting for a “gradual and cautious” approach to further easing in a tight 5-4 vote.
Technical Analysis
GBP/USD has rebounded from its local low of 1.3152, a key support level tested on August 1, climbing back toward the current 1.3500 region. This area aligns with the 100-period moving average on the 12-hour chart and coincides with a notable RSI divergence. The RSI has risen sharply to 62—approaching overbought territory—while exceeding prior RSI highs recorded at even higher price levels, forming a bearish divergence. This pattern suggests bullish momentum could be waning as the pair nears overbought conditions.
The next resistance at 1.3590 will be pivotal. A failure to break higher at this level could signal a deeper corrective phase, while a clear breakout could extend the bullish move. Furthermore, the current zone sits between the 0.618 and 0.50 Fibonacci retracement levels, reinforcing the case for a corrective setup. If price action begins to show rejection and renewed downside pressure from here, short opportunities could emerge, targeting a move back toward the 1.3152 local low.
Trading Recommendations
Trading direction: Sell
Entry price: 1.3500
Target price: 1.3160
Stop loss: 1.3650
Validity: Aug 22, 2025 15:00:00
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