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The GBP/USD currency pair on Friday failed to show either volatility or interesting moves. The Nonfarm Payrolls report "didn't work." Traders expected a significant move in either direction and answers on Federal Reserve monetary policy. In practice, nothing of the sort happened: no answers, no moves. The day's volatility was 67 pips, even less than the previous day.
In essence, the Nonfarm report changed nothing. A single report cannot alter the overall state and dynamics of the labor market. Recall that in January 2026, 160,000 jobs were created, while in February employment fell by 160,000... In March, 214,000 jobs were created; 63,000 in May, 31,000 in June, and 21,000 in July. Thus, one positive report does not change the broader picture.
Since the market received no clear answers, attention shifted to this week's US inflation report. Traders will have to wait until the last business day for answers again. Unfortunately, next Friday may also fail to provide clarity. Consensus forecasts assume US inflation in August will remain unchanged at around 3.4%. What conclusions can be drawn from that number? The slowdown in CPI has halted, and prospects remain unclear. If the conflict in the Middle East ends, inflation will resume its decline. If escalation and geographic spread occur, inflation will rise again. So a US inflation reading near 3.4% would not change Fed policy prospects.
The Fed still will not rush to hike the key rate because the labor market remains weak. The Fed will also not hurry to tighten because inflation is slowly falling. Kevin Warsh is still unlikely to be eager to raise rates as Donald Trump continues pressuring the Fed. As recently as Friday, the US president said that if the Fed refuses to cut rates, he will stop trade with countries running trade surpluses with the US. Again: Trump demands lower rates while the market expects... a hike?
Remember that Warsh is not Jerome Powell. Perhaps someday Warsh will distance himself from the White House, but to reach that conclusion he must demonstrate independence from the president. When he does, the market will understand that decisions are based solely on macro data. Until Warsh proves that independence, we remain of the view that Fed policy depends more on Trump than on inflation or the labor market.
Average volatility of the GBP/USD pair over the last 5 trading days is 54 pips. For the pound/dollar, this value is "low." On Monday, September 7, we therefore expect movement within a range bounded by 1.3460 and 1.3568. The major linear regression channel has turned up, indicating an uptrend. The CCI indicator entered oversold territory, warning of a possible end to the correction.
S1 – 1.3489
S2 – 1.3428
S3 – 1.3367
R1 – 1.3550
R2 – 1.3611
R3 – 1.3672
The GBP/USD pair retains an upward trend. Trump's policies will continue to pressure the US economy, so we do not expect long-term dollar strength. 2026 has been positive for the dollar due to geopolitics, but all stories end. On the weekly timeframe, the pair remains flat between 1.3150 and 1.3780 within a four-year uptrend, allowing for the expectation of continued pound gains in the medium term. Long positions with targets at 1.3611 and 1.3672 can be considered when price is above the moving average. Price below the moving average allows short positions with targets at 1.3460 and 1.3428.
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