Key points:

• Pound rises above $1.3370
• Powell floats job-market worry
• UK GDP out tomorrow – what to watch

UK economy is expected to post a modest gain of just 0.1% for August. Meanwhile, the greenback reversed course after Powell flagged a weak job market.

💬 Powell’s Dovish Turn Lifts Sterling

• The GBPUSD pair climbed to $1.3370 Wednesday, its highest level in two weeks, as the US dollar slumped following remarks from Federal Reserve chief Jay Powell, who hinted that more rate cuts were likely on the way.
• Powell told the National Association for Business Economics on Tuesday that “downside risks to employment appear to have risen,” suggesting that the Fed has room to ease further. That dovish tone hit the greenback across the board.
• The US dollar index dropped 0.7% over the past two sessions, giving up early-week gains as traders once again priced in two more rate cuts this year — one in late October, another in December.

📉 Dollar Slips, Majors Push Higher

• The euro took advantage of the weaker dollar, rising above $1.1630, while the yen strengthened, with USDJPY retreating to ¥151 from a Tuesday high of ¥152.60.
• The move marks a sharp reversal from the greenback’s rally earlier in the week, when stronger risk appetite and tariff fears kept the dollar bid. Powell’s comments turned that narrative on its head.
• Traders now see a near-100% probability of an October rate cut, according to the CME FedWatch tool, and a 70% chance of another in December — a sharp dovish tilt compared to just two weeks ago.

👀 Eyes on UK GDP

• The next major catalyst for the pound comes Thursday with UK GDP data for August. The figure is expected to show a tiny 0.1% monthly expansion. Analysts say that may be enough to reinforce bets that the Bank of England will hold steady at its next meeting.
• The UK economy has shown signs of resilience lately, with services activity improving and consumer spending stable, but weak manufacturing continues to cap momentum.
• For now, sterling is getting most of its lift from dollar weakness, not domestic strength — meaning the rally could fade quickly if the UK’s growth print disappoints.

Source: Tradingview