The Pound Sterling (GBP) weakens against major currencies on Thursday, excluding the Australian and New Zealand Dollars, as market expectations for a Bank of England (BoE) interest rate cut in August intensify.

A recent Reuters poll indicates a high probability of a 25 basis point rate cut by the BoE in its August meeting, driven by concerns over persistent wage growth despite headline inflation returning to the target 2%. However, market participants remain somewhat skeptical, pricing in only a 45% chance of rate cuts.

Despite the weaker sentiment, the UK economy shows signs of resilience, with the preliminary S&P Global/CIPS PMI report for July indicating a strong start to the third quarter. Both the composite and individual Manufacturing and Services PMIs exceeded expectations, signaling continued economic expansion.

Market Focus:

The Pound Sterling’s decline comes ahead of the release of the advanced United States (US) Q2 Gross Domestic Product (GDP) data, expected to show accelerated growth. Additionally, the US Dollar Index (DXY) remains relatively stable at around 104.30.

Traders eagerly await the upcoming Personal Consumption Expenditures (PCE) Price Index data for June, which is crucial for understanding the Federal Reserve’s (Fed) future monetary policy decisions. A deceleration in core PCE inflation could solidify expectations of Fed rate cuts in September.

Technical Analysis:

The GBP/USD pair has slipped below the critical support level of 1.2900, currently trading within a Rising Channel formation on a daily timeframe. The pair is holding above the key 20-day Exponential Moving Average (EMA), which suggests the uptrend might remain intact.

The 14-day Relative Strength Index (RSI) has moved into a neutral range, indicating a pause in the bullish momentum. However, the overall bias remains bullish.

The two-year high near 1.3140 remains a significant resistance zone for the Cable.