Pound Dips as Cre9dit Agricole Sees 2027 Rebound

That path matters because it reflects a shift in how investors should think about sterling: not as a one-way trade on UK weakness, but as a currency caught between persistent stagflation risk at home and a dollar that Crédit Agricole expects to lose momentum later next year. For now, though, the near-term call is driven by the US labor market, which dented expectations for aggressive Federal Reserve easing and pushed the greenback higher.

The August US payrolls report showed 162,000 jobs added, far above the 55,000 expected in the latest survey estimate, while unemployment held at 4.1%. That helped GBP/USD recover only partially after briefly probing a three-week low, ending Friday between 1.3489 and 1.3548 and closing just below the 1.3540-1.3550 resistance band.

Crédit Agricole said it remains “cautious” on GBP/USD from current levels, adding that sterling could act as a “pressure valve” for investors worried about the UK’s economic and fiscal outlook. The bank also said the pound already looks oversold and that global investors appear underweight UK assets, which it sees as a reason the currency should stabilize and later rebound once the dollar cycle turns.

Technical levels add to the short-term focus: 1.3480 is the first support to watch, with 1.3400 exposed on a clean break, while a move back above 1.3550 would ease immediate downside pressure. The pound’s US-traded ETF, FXB, has held above its 50-day moving average and near its 200-day moving average, while EUR-traded FXE is trading above both, suggesting the broader dollar trend remains the key driver for currency investors.

For investors, the story is less about a collapse in sterling than a widening window between a tactical dollar bid and a medium-term UK recovery case. The next test is whether US data keep supporting the dollar into the Fed’s policy meeting cycle, or whether the market begins to price the 2027 softening in the greenback that underpins Crédit Agricole’s rebound call.