The GBP/USD currency pair again showed a tendency to decline on Tuesday, but it held back from a larger drop. The US dollar has strengthened quite actively over the past 3–4 days, and during that time the market, as we have already noted, has been pricing in future Federal Reserve tightening — though it has done this, in our memory, several times already. Recall that as far back as June, the dollar strengthened materially after a neutral Fed meeting where Kevin Warsh first spoke about the unacceptability of current inflation levels. Since then, US inflation has slowed to 3.4%, and the market has worked through expectations of September tightening several times.

In the EUR/USD piece, we concluded that the most logical outcome for Wednesday and/or Thursday is a dollar decline, since the Fed cannot adopt a more hawkish stance than the market has already priced in. What about support from the Bank of England? To answer that, remember that the UK's August inflation report will be published this morning. Official forecasts call for inflation to rise to 3.1% in the UK — which we view as a worrying signal given the ongoing Middle East conflict, the blockade of the Strait of Hormuz and oil rising to $110/bbl this week. In short, accelerating inflation in August would imply that September will likely see consumer-price growth pick up again. Will the BoE wait until inflation hits 4% to begin tightening policy?

We believe the BoE's stance will become more hawkish regardless. Although Andrew Bailey has not guaranteed a September rate hike and even said he has no "secret plan" to raise rates, the BoE cannot fail to react to another uptick in inflation and must recognize that the indicator will probably continue to rise. Conclusion: If the BoE does not raise the key rate on Thursday, it will do so before year-end. Since one rate increase is clearly insufficient to tame inflation, the BoE should not delay the first tightening for too long.

Therefore, we expect the BoE to support the pound, which — note — has fallen less in recent days than the euro. On the daily timeframe, it is also clear that the current downward move in the pair is very likely a correction. If so, it should have ended already. We believe sterling has excellent prospects to rise toward the $1.39–1.40 area by year-end.

The average volatility of the GBP/USD pair over the last 5 trading days is 53 pips. For the pound/dollar, this value is classified as "low." Therefore, on Wednesday, September 16, we expect movement inside a range bounded by 1.3428 and 1.3534. The higher linear-regression channel has turned up, indicating an uptrend. The CCI entered the oversold area, warning of a possible end to the correction.

Nearest support levels:

S1 – 1.3428

S2 – 1.3367

S3 – 1.3306

Nearest resistance levels:

R1 – 1.3489

R2 – 1.3550

R3 – 1.3611

Trading recommendations:

The GBP/USD pair maintains an uptrend. Donald Trump's policies will continue to weigh on the US economy, so we do not expect long-term strength from the US dollar. So far, 2026 has been positive for the dollar due to geopolitics, but every story comes to an end. On the weekly timeframe, a flat range between 1.3150 and 1.3780 within a four-year uptrend supports expectations for continued pound appreciation in the medium term. Long positions with targets of 1.3611 and 1.3672 can be considered while price is above the moving average. Price below the moving average would allow bearish trading, with a target of 1.3428.

Explanations for Illustrations:

Regression channels help determine the current trend. If both are directed in the same direction, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction in which trading should be conducted at present;

Murray levels are target levels for moves and corrections;

Volatility levels (red lines) are the probable price channel within which the pair will spend the next 24 hours based on current volatility indicators;

The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.