15 September 2025,07:15
Daily Market Analysis
15 September 2025, 07:15
*Growth stagnates (flat GDP, weak industry, softer labor market) while inflation stays high.
*BoE boxed in: sticky inflation prevents cuts, but growth too weak to hike further.
*Politics adds uncertainty ahead of Autumn Statement, keeping GBP in tight ranges.
Sterling continues to tread water, with GBP/USD trading near 1.3550, as investors weigh conflicting domestic signals. UK growth flatlined in July, with GDP stuck at 0.0% versus a +0.4% gain in June, while industrial production and manufacturing output both contracted sharply. The labor market has also softened, with vacancies falling for the 37th straight quarter. Despite wage growth still elevated at 5.0%, the trend is lagging and likely to decelerate, amplifying fears of stagnation or even contraction in the months ahead. Business confidence surveys reflect a similar malaise, pointing to muted investment appetite and consumer caution heading into Q4.
The Bank of England faces an unenviable dilemma. Inflation remains stubborn at 3.8%, nearly double its 2% target, preventing the MPC from signaling aggressive easing. Markets expect the BoE to hold rates in September, with attention shifting to the tone of vote splits and forward guidance. Any hint of “gradual and cautious” cuts would be read as dovish, weighing on sterling, while hawkish dissenters could support the currency temporarily. Investors are also pricing in a shallow easing cycle compared with the Fed, leaving GBP somewhat supported by relative yield dynamics.
Adding to the uncertainty is the political backdrop. Chancellor Rachel Reeves faces mounting pressure ahead of the November 26 Autumn Statement, with investors wary that fiscal stimulus aimed at boosting growth could worsen inflation or necessitate higher taxes down the line. Meanwhile, lingering Brexit-related trade frictions continue to weigh on UK exporters. This uneasy balance—between weak growth and sticky inflation—leaves GBP rangebound until a clear catalyst emerges, with downside risks building if the economy tips toward contraction.
The GBPUSD is consolidating near the 1.3550 region, caught between support at 1.3435 and resistance at 1.3605. Price action shows repeated hesitation at the upper boundary, suggesting sellers are defending the zone, while dips are being cushioned around the 1.3500 handle. A clean break below 1.3435 would shift focus toward deeper supports at 1.3350, while a push above 1.3605 could open the path toward 1.3775.
Momentum signals remain balanced. The RSI is at 54, holding slightly above the midline and indicating mild bullish bias without strong momentum. Meanwhile, the MACD is flat around the zero line, reflecting a lack of conviction and reinforcing the sideways structure.
Resistance level:1.7750, 1.7840
Support level: 1.7615, 1.7480
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