August 17th Chart of the Week: GBP/USD navigating the FOMC minutes and UK CPI release

Financial markets will be closely scrutinizing the Federal Reserve’s release of the July FOMC meeting minutes on Wednesday, August 19, at 2:00 p.m. ET¹. (Please check your local time) Investors are eager for deeper insight into the internal policy debate following the July 28–29 decision, which kept the benchmark target range steady at 3.50%–3.75% via an unusually fractured 9–3 vote². Traders and investors will read the detailed account line by line to gauge whether officials see a September interest rate adjustment as a live possibility or whether lingering inflation concerns favor keeping borrowing costs higher for longer. The minutes are expected to shed crucial light on the extent of divisions within the central bank ahead of the next scheduled decision-making meeting in mid-September.

Although the due-for-release minutes are for the July 28 - 29th meeting, which took place ahead of the disappointing non-farm payrolls (NFP) report released on August 7th, policymakers are likely paying attention to the recent downtrend in NFP alongside heightened inflation concerns, as part of their mandate. Over the past six months, U.S. Nonfarm Payroll (NFP) data has reflected a clear and progressive deceleration in labor market momentum. Job creation peaked early in the spring, with strong additions of 214K in March and 148K in April. However, growth slowed noticeably in May (downwardly revised to 63K) and then sharply weakened in June to just a 20K gain. This cooling trend culminated in July’s report, where the economy unexpectedly shed 23K jobs—marking the lowest monthly reading since February and signaling that higher interest rates could be taking an increasingly firm hold on the labor market.

The Office for National Statistics is set to release the UK Consumer Prices Index (CPI) inflation report for July on Wednesday, August 19 (Please check your local time). According to Bloomberg’s economic calendar, economists anticipate a slight drop in headline inflation to 2.5%, down from 2.6% in June. Traders may also be monitoring the legacy Retail Price Index (RPI), which recorded a 2.9% Y/Y reading in the July report¹.

Central bank officials and market participants will closely analyze the underlying figures to determine whether the recent price pressures seen since April are broadening across the economy and how the contributors’ readings will differ.

A sustained higher reading than in prior months could complicate matters for the Bank of England, potentially reinforcing a cautious stance and making monetary policy easing less likely in the near term.

At its late July meeting ending on July 29, the Bank of England’s Monetary Policy Committee (MPC) voted 6–3 to maintain the benchmark Bank Rate at 3.75%. Although headline CPI inflation had eased to 2.6% in June, a hawkish minority of three members—Huw Pill, Catherine Mann, and Megan Greene—voted for an immediate 25-basis-point hike to 4.00%. Their push reflected growing concern over upside inflation risks stemming from volatile global energy prices and geopolitical conflicts in the Middle East³.

While Governor Andrew Bailey and the majority cited domestic disinflation and softening labor markets as grounds for holding steady, the committee warned that inflation could temporarily rebound toward 3.2% later in the year, signaling to financial markets that monetary policy remains strictly data-dependent and can tighten if price pressures persist³.

• Following a breakout in May 2025 below an ascending channel that began in early January, GBP/USD traded within a widening formation, as marked by the red lines on the chart. The boundaries of the formation acted as support and resistance levels throughout the entire duration.
  
• Currently, price action is trading in the midrange of the formation, with multiple chart patterns identifiable within it.
  
• As of January 2026, price action completed an inverted complex head and shoulder formation. On Friday, August 14th, price action broke and closed above the neckline (Blue) on the daily timeframe.
  
• The breakout took price above its monthly PP of 1.3419, as well as its EMA9, SMA9, and SMA21.
  
• The two fast-moving averages, EMA9 and SMA9, intersect the H&S neckline, forming an immediate support level near 1.3500, which also serves as a psychological level. The intermediate SMA21 intersects with the monthly PP of 1.3419, forming a second level of support below price action.
  
• Multiple monthly resistance levels above price action are indicated on the chart: R1 of 1.3619, R2 of 1.3758, and R3 of 1.3958, which intersect with the extension of the widening formation’s upper border (red line).
  
• RSI14 indicator, currently at 64.90, remains in line with price action, supporting the breakout above the neckline, and is approaching its overbought level.
  
• Similar to RSI, the MACD indicator is in line with price action, with the MACD line moving higher and remaining above its signal line. The histogram remains on the positive side; however, although price action made a higher high in August than in July, the histogram reflects a weaker reading in August than at its July peak.

In summary, the technical landscape for GBP/USD reflects a cautiously bullish bias following the breakout and daily close above the inverted head-and-shoulders neckline. Near-term support is established around the 1.3500 psychological mark (confluent with the 9-day EMA and 9-day SMA), with secondary structural support at 1.3419 (monthly PP and 21-day SMA). To sustain an upward trajectory toward higher resistance targets at 1.3619 (R1), 1.3758 (R2), and 1.3958 (R3 / upper border of the widening formation), the momentum needs to withstand impending fundamental volatility from the July FOMC minutes and UK CPI release. While RSI and MACD remain supportive of price action, the minor bearish divergence in the MACD histogram warrants disciplined risk management around key levels.

Abbreviation list:

EMA: Exponential moving average

SMA: Simple moving average

RSI: Relative strength index

MACD: Moving average convergence divergence

Pivot point: PP

Support: S

Resistance: R

Footnotes

¹https://www.bloomberg.com/markets/economic-calendar

²https://www.federalreserve.gov/newsevents/pressreleases/monetary20260729a.htm

³https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2026/july-2026