From the UK's perspective, inflation remains "firm," leading to a slower pace of monetary easing by the Bank of England (BoE) compared to the Federal Reserve (Fed). This divergence is expected to continue benefiting GBP/USD in the medium term. On September 11th, UK Chancellor of the Exchequer Rachel Reeves indicated that the government is considering reforms to business rates (also known as non-domestic rates), aiming to make it easier for small businesses to expand and further stimulate economic growth. Proposed measures include smoothing out sharp tax increases faced by businesses when property values rise during expansion, as well as adjusting the tax calculation method to offer greater relief when properties are improved or upgraded. These proposals come ahead of the annual budget announcement scheduled for November 26th. Now, the UK economy faces multiple challenges, including rising borrowing costs, an uncertain growth outlook, and the recent failure of a welfare cuts bill in Parliament — leading many economists to believe that the government may need to secure additional funding amounting to tens of billions of pounds. Reeves noted, "Our economy isn't broken, but it does feel stuck." Helen Dickinson, CEO of the British Retail Consortium, expressed support for the reform plans but urged the government to quickly clarify previously promised tax reductions for retail, hospitality, and leisure businesses. She added that until the budget is officially unveiled, many local employment and store investment plans will remain on hold. 

On Thursday, US initial jobless claims data came in worse than expected, signaling continued weakness in the labor market. This further reinforced market expectations that the Fed will begin cutting interest rates at its upcoming policy meeting next week. In addition, this dovish outlook has put downward pressure on the US dollar index, extending its recent weak trend. Market expectations now suggest that the Fed's rate-cutting cycle will not stop in September. Meanwhile, the market has fully priced in over 100 basis points of rate cuts over the next year. Key upcoming dates include: October 30th — if the Fed cuts by 50 basis points in September, it may pause in October; if the cut is only 25 basis points, the October meeting will become much more significant; December 11th — as the final meeting of the year, it could mark a crucial point for a potential third (or second) rate cut; and May 2026th — when Fed Chair Jerome Powell's term ends, with uncertainty surrounding his reappointment. Andrew Tyler, Head of Global Market Intelligence at JPMorgan, commented: "We don't think this report poses a credible threat to the Fed's suspension of interest rate cuts in September, but a significantly hawkish data will indeed adjust the Fed's response function to the October and December meetings."  

Based on the weekly chart, GBP/USD initially fell below the EMA12 but quickly rebounded with support from the Bollinger middle band, now returning above the EMA12. The RSI is nearing 60, entering a strong bullish zone. Besides, the MACD lines are about to form a golden cross. If this cross materializes, the price could break above 1.379. A strong breakout may push the pair toward 1.4, while a weaker breakout might see it retreat to around 1.32. The daily chart indicates that the Bollinger Bands are narrowing, and the moving averages are flattening, suggesting that a breakout could happen at any time. The RSI stands at 55, and although the MACD has formed a golden cross, no clear reversal signal has emerged yet. Overall, the pair is expected to rise toward previous highs near 1.379. It is recommended to buy at lows.

Trading direction: Buy

Entry price: 1.357

Target price: 1.4

Stop loss: 1.32

Support: 1.34/1.337/1.32

Resistance: 1.36/1.362/1.4