UK Summer Bank Holiday caused GBP to stop falling against USD, causing bumpy trading in most FX pairs during London-New York session. The GBP/USD exchange rate is up 0.19% at 1.2601.

US bond yields decline as the GBP rises marginally, affecting currency dynamics. The busy US economic calendar affects the GBP/USD relationship, with the US Dollar’s fate primarily reliant on Dollar dynamics without Bank of England Chief Economist Huw Pill’s speech and property price release.

A risk-on impulse boosted global bond rates, especially in the US, driving Monday’s price movement. The US Dollar Index fell 0.12%, to 104.060, due to a decline in US bond yields.

Fed Chair Jerome Powell’s Jackson Hole address was seen as hawkish, emphasising the Fed’s commitment to combating inflation and justifying higher rates if growth exceeds trend and the labor market remains tight. He emphasised the central bank’s reliance on evidence and cautious decision-making in short-term policy.

Money market futures predict the Fed won’t raise interest rates in September due to Powell’s comments. However, in November, traders anticipate a 25 basis point rate hike, with odds of nearly 50%, according to the CME FedWatch Tool.

Recent data suggests the GBP/USD pair may resume its downward trend due to the US economy’s activeness. Volatility in housing, consumer confidence, and the labor market could cause volatility. Unexpected developments supporting tightening may lead to further US Dollar strength and a weakening of the GBP.

The GBP/USD pair has experienced losses since August 3, reaching a low of 1.2620. Market structure suggests a bearish continuation, with the possibility of testing last Friday’s high of 1.2655 if the pair closes daily above 1.2600. If this happens, the 200-day Moving Average (DMA) will be at 1.2400, and the major’s downtrend will resume.

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