GBP/USD rally grinds to a halt, but downside remains limited

• GBP/USD managed to eke out a fresh 13-month high before falling back.
• Cable ended Thursday where it started, trading on the north side of 1.3000.
• UK PMI figures improved across the board, but mixed US PMIs spark risk aversion.

GBP/USD tipped into another fresh 13-month peak on Thursday, climbing to 1.3130 before broader market sentiment took a turn for the worse, bolstering the Greenback. Cable was dragged back to the day's opening bids around 1.3090 after US Purchasing Managers Index (PMI). figures came in lopsided.

Forex Today: Investors look at Jackson Hole and rate cut bets

Friday will see all eyes turned to Federal Reserve (Fed) Chairman Jerome Powell who is slated to speak at the Jackson Hole Economic Symposium. Markets are hoping that the Fed head will introduce firmer guidance on how likely the Fed is to cut in September, as well as for how much. 

Market participants continue to pine for a September cut, but Thursday's PMI data sparked a pullback from a recent upswing into bets that the Fed would cut 50 bps on September 18. Rate markets have pulled back to a healthier overall expectation of a single quarter-point cut in September, pricing in around 75% odds of a 25 bps rate trim.

UK PMI figures broadly bumped to a higher-than-expected print in August, with the Composite, Manufacturing, and Services PMI components all printing above forecasts and rising from their previous figures. UK Services activity rose to 53.3 from the previous 52.5, vaulting over the forecast 52.8 and rising to the indicator's highest level since April.

US Manufacturing PMI figures tumbled back to 48.0 in August, well below the forecast steady print of 49.6. The US Services PMI unexpectedly tick upwards to 55.2 from 55.0 compared to the forecast decline to 48.0. Despite the upswing in Services PMI numbers, underlying employment figures continue to show a shortening in the US labor market, adding to concerns that were mostly ignored when the US Bureau of Labor Statistics retroactively wiped over 800K jobs from March's Nonfarm Payrolls (NFP) print this week.

GBP/USD price forecast

Cable has snapped a five-day win streak, but bidding pressure in GBP/USD is still poised for a breach into multi-year highs, provided buyers can maintain pressure long enough to keep prices climbing beyond 2023's July peak of 1.3142. Odds favor the buyers as GBP/USD has closed in the green for all but one of the last ten consecutive trading days.

GBP/USD daily chart