The GBP/USD currency pair showed very weak, inconspicuous movement once again. Throughout the day, no significant economic or fundamental information was released. Therefore, there was again nothing for traders to react to. As a consequence, volatility remained low, which, however, has not surprised anyone in August. As mentioned, the annual Non-Farm Payroll report is set to be released today, which essentially serves as a revision of all previous monthly reports. We have discussed this in the EUR/USD article. Now, let's talk about Kevin Warsh's speech.

Warsh's speech will take place at the Jackson Hole symposium. Typically, at such events, the Federal Reserve Chair addresses monetary policy. However, it's important to note that Warsh's approach to this topic is of immense significance. In the last two Fed meetings, Warsh spoke about high inflation and the necessity to bring it down to the target level of 2%. However, talking and acting are two different things. Wanting to do something and being able to do it is also different. Warsh was appointed by Donald Trump so that the Fed would begin to lower the key rate. This is crucial. We do not know exactly how Warsh is supposed to achieve the necessary results, but it's likely there is some plan in place. For instance, in the last Fed meeting, only three FOMC members voted to tighten policy, even though inflation remains significantly above target.

Furthermore, we might be unfair to Warsh, and perhaps he does not intend to dance to the White House's tune, maintaining the central bank's independence. In this case, the FOMC committee should genuinely consider the option of raising the key rate, but it should have done this already yesterday. It is evident to all that the Strait of Hormuz will not be opened anytime soon. If Trump intensifies pressure, Tehran may also close the Bab-el-Mandeb Strait or resume strikes on oil and gas infrastructure in the region, or start targeting Trump's allies in Europe. In any case, this points to a new escalation. Therefore, expecting lower oil prices and, consequently, a slowdown in inflation is naive.

This brings the U.S. labor market into focus, which has been declining for the past four months and fell below the "waterline" in July. Today's annual report may further reduce the total number of jobs created in the American economy. Even if the Fed wishes to raise the key rate, how can it execute a "hawkish" scenario if doing so risks causing the labor market to decline further? Thus, we are very skeptical that the Fed will raise the key rate even once by the end of the year. Warsh may want this, but it is not guaranteed to happen. Warsh can talk about it, but it is not certain that it won't be disingenuous. And most importantly, it is not guaranteed that the market will believe the Fed Chair's words.

The average volatility of the GBP/USD pair over the last 5 trading days is 45 pips, which is considered "low." On Friday, August 28, we expect movement of the pair within the range bounded by 1.3545 and 1.3635. The upper linear regression channel has shifted upward, indicating a continuation of the upward trend. The CCI indicator has entered the overbought area three times, warning of a potential correction.

Nearest Support Levels:

S1 – 1.3550

S2 – 1.3489

S3 – 1.3428

Nearest Resistance Levels:

R1 – 1.3611

R2 – 1.3672

R3 – 1.3733

Trading Recommendations:

The GBP/USD currency pair maintains an upward trend. Trump's policies will continue to exert pressure on the U.S. economy; therefore, we do not expect long-term growth in the U.S. dollar. The year 2026 is shaping up to be highly positive for the dollar due to geopolitical factors, but every fairy tale comes to an end. On the weekly timeframe, a flat pattern persists between the levels of 1.3150 and 1.3780 within a four-year upward trend, allowing for expectations of continued growth of the British currency in the medium term.

Long positions with targets of 1.3635 and 1.3672 can be considered if the price is above the moving average. If the price is below the moving average line, trading on the downside can be conducted with targets of 1.3550 and 1.3545.

Explanations for Illustrations:

• Linear regression channels help determine the current trend. If both are directed in the same direction, the trend is strong.
• The moving average line (settings: 20, 0, smoothed) defines the short-term trend and the direction in which trading should currently be conducted.
• Murray levels are target levels for movements and corrections.
• Volatility levels (red lines) indicate the probable price corridor in which the pair will operate for the next day, based on current volatility metrics.
• The CCI indicator—its entry into the overbought area (above +250) or oversold area (below -250) indicates that a trend reversal in the opposite direction is approaching.