Key events today:

03.09 13:15 UTC: GBP – Parliamentary hearings on the Bank of England’s monetary policy report.

03.09 14:00 UTC: USD – Job openings and labor turnover data from the Bureau of Labor Statistics.

The pound is under increased pressure amid a spike in long-term UK government bond yields and discussions on budget measures: rising long-end rates amplify doubts about growth sustainability and raise borrowing costs for the economy. As a result, GBP is weakening against the dollar, which gains an additional “quality” premium amid global fiscal risk concerns.

The monetary backdrop adds volatility to the pound. The market is navigating between the risks of autumn easing by the Bank of England and the need to keep rates higher for longer due to sticky services inflation. Diverging expectations on the BOE’s path, combined with stronger demand for USD on the back of resilient US Treasury yields, form an unfavorable fundamental balance for GBPUSD.

In the short term, UK budget headlines and Gilt yields will remain key drivers for the pound; US labor and activity data could further widen the differential in favor of the dollar. Overall, fundamentals suggest selling into rallies with a target toward retesting recent lows.

Recommendations: SELL 1.3395, SL 1.3450, TP 1.3345.