GBP strengthens above 1.3500 as BoE stays hawkish, traders brace for US NFP data

• GBP/USD gains traction to near 1.3530 in Friday’s early European session.
• BoE Pill’s hawkish remarks underpin the British Pound.
• All eyes will be on the US August employment report on Friday.

The GBP/USD pair edges higher to around 1.3530 during the early European trading hours on Friday. Hawkish rhetoric from a Bank of England (BoE) policymaker provides some support to the British Pound (GBP) against the US Dollar (USD). Traders will keep an eye on the US August employment report later on Friday. 

Bank of England (BoE) Chief Economist Huw Pill said on Thursday that the central bank should raise its key interest rate to limit the risk that inflation will stay above its target for a prolonged period, even though the course of the war in the Middle East remains highly uncertain. Pill was joined by two other members in voting for a rate hike in July, with six members backing a hold.

Traders in interest rate futures on Thursday priced the chance of a 25-basis-point (bps) rate increase at the upcoming policy meeting in September at little more than 15%, although that chance rose to more than 70% for the subsequent meeting in November.

Attention will shift to the US jobs data later in the day, which could help shape expectations for the Federal Reserve’s (Fed) next policy move. The Nonfarm Payrolls (NFP) report is expected to show 56,000 jobs added in August, while Unemployment Rate is projected to hold steady at 4.1% during the same period. A robust jobs report could reinforce the Fed’s move to raise the interest rate and boost the Greenback in the near term. 

GBP downside risk persists as UOB watches key levels

Strategists at UOB Group maintain a cautious stance on GBP in the 1–3 week horizon, reiterating that “the risk for GBP remains on the downside, and the level to watch is 1.3480.” They note that this technical objective was achieved on Tuesday, with the pair “dropping to a low of 1.3475.” While they judge that “the downside risk for GBP remains intact,” UOB highlights that “there has been no clear increase in downward momentum, and it is left to be seen whether the next technical target at 1.3415 is within reach.” On the topside, the bank flags that “a breach of 1.3545 (‘strong resistance’ level previously at 1.3570) would indicate that the downward pressure from last Friday has eased.”

Pill signals front-loaded BoE hike but plays down extended tightening

Pill’s latest remarks score 8.2 on FXS Speechtracker, modestly above the 7.9 historic average, underscoring a slightly more forceful tone than usual. The explicit call to raise Bank Rate to 4% and the emphasis on prompt, decisive action to head off second-round effects mark a clear hawkish tilt relative to Pill’s past communications.

However, Pill’s insistence that such a move “need not be the start of a prolonged and aggressive series of increases” tempers the hawkishness, framing this as a front-loaded adjustment rather than the start of a full-blown tightening cycle. For GBP, this mix of near-term hawkish action and medium-term caution supports a stronger bias in the short run, while the warning against extreme “what if” scenarios and fine-tuning in the face of energy-price uncertainty suggests the MPC will avoid over-committing to a long hiking path.

Technical Analysis: GBP/USD maintains a constructive outlook above the 100-day SMA

In the daily chart, GBP/USD retains a mildly bullish near-term tone as price holds above recent closing levels while still facing a dense cap formed by the 100-day simple moving average (SMA) at 1.3443 and the Bollinger band structure overhead, with the middle band near 1.3555 and the upper band around 1.3661. The Relative Strength Index (RSI) at 51.5 has eased back toward neutral, hinting at consolidative rather than impulsive conditions as buyers attempt to extend the latest advance.

On the topside, initial resistance is seen at the 100-day SMA around 1.3443 and the nearby lower segment of the recent Bollinger envelope near 1.3450, with more notable supply emerging at the Bollinger middle band around 1.3555 and then the upper band close to 1.3661. A daily close above the mid-band would open the way toward retesting the upper Bollinger band, while failure to clear the 1.3550 area would leave the pair vulnerable to a pullback toward prior session lows, even if clearly defined moving-average support is still lacking on the current configuration.

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