FX Report: 15th - 18th September 2025
Buy Side Target
1.3730
Sell Side Target
1.3330
Current Price
1.35574
GBPUSD has remained in a neutral phase throughout last week, our traders are observing for pushes above 1.3570 or below 1.3500 to determine any mid-term positioning. Until then the market will be assessed on a neutral basis, and used to rebalance the current portfolios. Should we go bullish we are looking at 1.3730 as our mid-term target, and 1.3330 as our bearish target in the event of a mid-term sell off.
United Kingdom Factors
Grocery Inflation Remains Elevated
UK grocery price inflation stands at 4.9% in early September, only slightly down from last month. The persistence of high food prices keeps pressure on household budgets and sustains inflation concerns. This dynamic supports the case for the BoE to remain cautious on rate cuts, lending some backing to sterling.
Wage Growth Puts Pressure on Policy
UK wages rise at around 4.7% in the three months to July. Under the triple-lock system, this pushes state pensions higher, adding to government spending burdens. Strong pay growth feeds into inflation risks, raising the possibility that interest rates stay higher for longer — a potential GBP-positive factor.
Labour Market Shows Signs of Cooling
Payroll employment declines by about 8,000, and unemployment edges up toward 4.7%. The slowdown in job creation signals that the labour market is weakening. This reduces pressure on the BoE to tighten further, which could weigh on GBP sentiment if investors focus on growth risks.
UK Gilt Yields Surge
UK long-term gilt yields, particularly the 30-year, rise sharply toward 5.7%, reflecting growing fiscal stress and concerns about public debt sustainability. While higher yields may attract some buyers, the underlying fiscal worries erode investor confidence in sterling.
United States Factors
Producer Prices Ease
U.S. Producer Price Index (PPI) data shows softer inflation pressure. This outcome reinforces expectations of Fed rate cuts, putting the dollar under pressure and offering GBP/USD a potential lift.
Fed vs BoE Policy Divergence
Markets expect the Fed to cut rates sooner than the Bank of England, while the BoE maintains a cautious stance due to persistent UK inflation. This divergence favours sterling over the dollar, giving GBP/USD an upward bias.
Last FX Report: 8th - 11th September 2025
Buy Side Target
1.730
Sell Side Target
1.3330
Current Price
1.3506
Market Outcome
Neutral
Our traders capitalised on both buying and selling opportunities throughout the week as we remained neutral between the regions of 1.3570 and 1.3330 on GBPUSD. Our proprietary theories and tools helped to limit risk in the market towards directional biases to be able to execute with clarity and play the short-term hands.
*Contracts for difference (CFDs) are complicated financial contracts based on leverage, which can possibly result in huge fluctuations in profits or losses. Therefore, it is essential to study and understand CFDs thoroughly before embarking on investment. You should at the same time stay conscious and ready yourself for the potential risk of losing a part or your whole capital. This outlook is non-financial advice, you should consult with your personal financial advisor before making any investment decisions.
How we traded this outlook:
