GBPUSD Faces Crucial Week Ahead of Key Macroeconomic Data
The British Pound Sterling (GBPUSD) is facing a crucial week ahead of key macroeconomic data releases. Currently, GBPUSD is testing the psychologically important 1.35000 level after rallying over 1.5% from its late-July low.
The pair's movement has been driven by the disappointing U.S. Gross Domestic Product (GDP) and Nonfarm Payrolls reports, which lowered Federal Reserve rate hike expectations and weakened the greenback.
According to forward curves, there is a near-convergence of GBP and USD rates over the next six months, with minimal carry cost for either direction at the 6-month horizon.
The options market indicates a persistent GBP-put skew, suggesting that downside protection is in demand. This is reflected in the 25-delta risk reversal being persistently negative across all tenors.