British Pound edges higher as Bailey calms recession fears

• Bailey says UK is not near recession, citing solid data.
• BoE split persists as markets price strong hold odds.
• US PPI and CPI remain key Sterling-Dollar catalysts.

The Pound Sterling registers modest gains of over 0.08% as Bank of England (BoE) policymakers testify before the UK Treasury Select Committee, while a light economic docket in the US keeps the Greenback with a negative tone. The GBP/USD trades at 1.3548 after bouncing off the daily low of 1.3521.

GBP/USD rises as BoE testimony offsets soft retail sales

BoE Governor Andrew Bailey revealed at the Monetary Policy Committee Hearing that he does not think that “we are not on the verge of a recession,” adding that the latest data was solid.  He added that the jobs market is softening, due to a decline in the hiring rate.

Other BoE members, like Alan Taylor, commented that keeping rates at a “moderately restrictive level” provides insurance. At the same time, David Ramsden said that domestic inflation is relatively benign, while Megan Greene added that the length of time Oil prices have been higher worries her regarding potential second-round effects.

Given the backdrop, the BoE’s Monetary Policy Committee seems to remain split, but expectations that the UK’s central bank will increase rates in September 17 remain far from happening, with money markets pricing in a 86% for holding the Bank Rate.

In the last meeting, the vote split was 6-3, and it is expected to remain the same for next week’s meeting, one day after the Federal Reserve reveals its policy decision.

Data-wise, the UK’s retail sales growth dipped to a four-month low in August, as figures from the British Retail Consortium trade body showed on Tuesday.

In the meantime, the Middle East conflict sent energy prices higher, following attacks on Saudi Arabia's energy facilities by the Houthis.

In the US, the New York Fed released its Consumer Survey, which showed that households are becoming slightly more optimistic about inflation, despite projecting higher future gasoline prices.

The data release barely moved the needle as traders' eyes are on the release of US inflation data on the producer and consumer sides.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3543. The pair holds a mild bullish bias as spot trades above the Simple Moving Average Triple around 1.3466 and above the latest downtrend resistance line turn-support near 1.3508, suggesting buyers remain in control while the Relative Strength Index around the low-50s hints at modest, rather than exuberant, upside momentum.

On the topside, immediate resistance appears at the nearby descending trend line around 1.3544, with further hurdles seen at the upward-sloping supports now acting as caps near 1.3606 and 1.3631. On the downside, a pullback towards 1.3508 would test the reclaimed descending trend line, while a deeper retracement could expose the clustered Simple Moving Averages around 1.3466 as the next key support band.

(The technical analysis of this story was written with the help of an AI tool. Know more.)