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British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
GBP/USD has rallied more than 2% from the October low, reaching its highest levels in over five weeks.
A bullish outside-week reversal fueled a break above the monthly opening range, strengthening the near-term recovery.
The advance is now confronting a major technical resistance confluence, with the 200-day moving average posing the next significant hurdle.
Failure to clear resistance would leave Sterling vulnerable, with the October lows remaining critical to the broader outlook.
U.K. and U.S. PMI releases headline near-term event risk ahead of next week's highly anticipated Fed decision.
Resistance 1.3406, ~1.3433, 1.3465/74 (key) - Support 1.3353, 1.3302 (key), 1.3245
Sterling has regained its footing following last month's sharp decline, with the latest advance marking a meaningful shift in the near-term technical picture. GBP/USD has rallied in five of the past six sessions, with bulls now confronting a pivotal resistance hurdle that could determine whether the recovery has further to run. Attention turns to Friday's preliminary U.K. and U.S. PMI releases before next week's Federal Reserve decision, with the reaction in Treasury yields and the dollar likely to play an important role in shaping GBP/USD direction into month-end. Battle lines drawn on the GBP/USD short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more. Join live on Monday’s at 8:30am EST.

British Pound Price Chart – GBP/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Technical Outlook: In last month’s British Pound Short-term Outlook we noted that GBP/USD had, “declined in four of the past five weeks, with the latest selloff driving Sterling below the 200-day moving average for the first time since July... From a trading standpoint, rallies would need to be limited to 1.3408 IF price is heading lower on this stretch with a close below 1.3302 needed to fuel the next major leg of the decline.” Sterling broke lower the following day, extending its decline to nearly 3.2% from the September high before rebounding last week from key support at 1.3140—a level defined by the May and August 2025 lows and the June 2026 low.

An outside weekly reversal last week has broken through the monthly opening range highs with the advance extended more than 2.1% off the yearly low. The rally is now testing resistance for a third consecutive day at the 50% retracement of the August decline near 1.3406 and the focus is on possible inflection off this level into the close of the week.

British Pound Price Chart – GBP/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Notes: A closer look at Sterling price action shows GBP/USD trading within the confines of an ascending pitchfork extending off the October lows. Initial support rests at the 23.6% retracement of the monthly advance at 1.3353 which converges on the median line today. Subsequent support rests at the May low at 1.3302 with a break / daily close below the 61.8% retracement at 1.3245 needed to put the bears back in control.

The 200-day moving average now converges on the 75% parallel near ~1.3433 and a break / close above this slope is needed to fuel the next leg of the rally towards a key pivot zone at the February low-day close (LDC) and the 2026 yearly open at 1.3465/73- look for a larger reaction there IF reached. Subsequent resistance is eyed at the July high at 1.3558.

   
       

Bottom line: GBP/USD has rebounded sharply off major technical support with the rally now extending to the highest levels in more than five-weeks. From a trading standpoint, losses should be limited to 1.3353 IF price is heading higher on this stretch with a close above the 200-day moving average needed to fuel the next leg of the uptrend.

GBP/USD event risk into the weekly close centers on Friday’s preliminary U.K. and U.S. PMIs, but attention will increasingly shift toward next Wednesday’s Federal Reserve decision. A November Bank of England hike is already largely priced following this week’s stronger employment and inflation data, leaving limited room for further sterling gains from BoE expectations alone. The U.K. Budget is also due next Wednesday, but the Fed will likely remain the primary catalyst, with markets focused on whether Kevin Warsh signals that persistent inflation warrants further tightening or endorses a pause. Stay nimble into the release and watch the weekly closes for guidance. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD technical trade levels.

Key GBP/USD Economic Data Releases

Active Short-term Technical Charts
Euro Short-term Outlook: EUR/USD Rebound Faces Critical Test After Trend Break
Gold Price Short-term Outlook: XAU/USD Holds Critical Support as Breakout Nears
Canadian Dollar Short-term Outlook: USD/CAD Five-Week Rally Hits a Wall at Major Resistance
Japanese Yen Short-term Outlook: USD/JPY Breakout Risk Builds Below 200-Day Average
Australian Dollar Short-term Outlook: AUD/USD Rebound Challenges September Downtrend
US Dollar Short-term Outlook: USD Four-Week Rally Stalls Below Key Resistance
Swiss Franc Short-term Outlook: USD/CHF Rebound Tests Broken Uptrend
--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

The British Pound (GBP) trades 0.1% higher at around 1.3395 against the US Dollar (USD) during the European trading session on Wednesday. The British currency strengthens as hotter-than-expected United Kingdom (UK) Consumer Price Index (CPI) data for September has prompted hawkish Bank of England (BoE) expectations.

Earlier in the day, the Office for National Statistics (ONS) has reported that the headline CPI grew by 3.5% Year-on-Year (YoY), faster than 3.4% estimates and the August reading of 3.1%. The core CPI – which strips off volatile components of food, energy, alcohol and tobacco – also grew stronger by 2.8% YoY vs. estimates of 2.7% and the previous release of 2.6%.

BoE path seen as firmly higher as markets price multiple UK rate hikesAnalysts at Societe Generale argue that the near-term policy path is now largely predetermined, with “for the BoE, a 25bp increase bank rate in November is locked in.” They add that money markets are already discounting a more extended tightening cycle, noting that they are “aggressively priced for another three hikes by next summer to 4.75% unless the progress in inflation stalls and the economy extends its resilient performance into 2027.”

Going forward, investors will focus on the UK Retail Sales data for September and flash S&P Global PMI data for October scheduled for Friday.

Meanwhile, the US Dollar is under pressure due to concerns over United States (US) Artificial Intelligence (AI)-growth optimism and expectations that the Federal Reserve (Fed) will keep interest rates steady in the policy meeting later this month.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3391. The pair holds above the 20-period exponential moving average (EMA) at 1.3303, keeping the near-term tone constructive as price extends its recovery from recent lows. The Relative Strength Index (RSI) at 57.5 leans to the bullish side without yet signaling overbought conditions, suggesting room for further upside while the pair remains supported by the reclaimed short-term trend baseline.

On the downside, initial support is seen at the 20-day EMA at 1.3303, with the latest close at 1.3391 acting as a nearby pivot level for any corrective pullbacks. Looking up, the pair could enter a fresh upside leg if it manages a decisive break above 1.3410.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Read more.

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note GBP/USD surprised with a stronger-than-expected surge to 1.3371 before easing to 1.3329. Intraday, the British Pound (GBP) is now seen consolidating between 1.3290 and 1.3360 as overbought conditions cool. Over the next 1–3 weeks, however, upward momentum is still building, and UOB sees scope for a push toward resistance at 1.3405 while support sits at 1.3260.

Pound retains constructive short term tone "24-HOUR VIEW: Following the advance in GBP that reached a high of 1.3278 last Thursday, we indicated on Friday that “while there is scope for GBP to continue to rise, any advance should stay within a 1.3240/1.3295 range.” We did not expect upward momentum to strengthen so quickly, as GBP soared to a high of 1.3371. GBP pulled back from the high to close at 1.3329 (+0.40%). Upward momentum has slowed with the pullback. This, combined with overbought conditions, suggests that instead of continuing to rise, GBP is more likely to rangetrade between 1.3290 and 1.3360."

"1-3 WEEKS VIEW: The following are excerpts from our update last Friday (16 Oct, spot at 1.3270): “GBP could edge higher toward 1.3315. Currently, it is too early to determine whether momentum will strengthen sufficiently for a break above this level. To sustain the momentum buildup, GBP must hold above the ‘strong support’ level, now at 1.3210.” Instead of edging higher, GBP broke above 1.3315 and soared to a high of 1.3371. Upward momentum continues to increase, and GBP could rise toward 1.3405 next. On the downside, the ‘strong support’ level is now at 1.3260."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The GBP/USD pair holds steady around 1.3330 during the early European trading hours on Monday. Traders continue to assess the US interest rate path after Federal Reserve (Fed) Chair Kevin Warsh’s remarks. All eyes will be on the UK jobs data on Tuesday. On Wednesday, the UK Consumer Price Index (CPI) inflation report will be in the spotlight.

During the 2026 IMF-World Bank annual meetings in Bangkok on Friday, the Fed Chairman said that he does not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or hold short-term rates steady at its upcoming October 27-28 meeting.

Fed funds futures are pricing an implied 84% chance that the US central bank stays on hold at its next two-day meeting on October 28, according to the CME FedWatch tool.

UK economic data later this week are likely to help seal the deal on the first rate hike from the Bank of England (BoE) in over three years in November. “We expect a 25-basis-point hike at the central bank’s next meeting in November. We also see another move in February,” said Bloomberg Economics chief UK economist Dan Hanson.

Pound resilience masks growing UK consumer strains and rate repricing risksAnalysts at MUFG note that the Pound “continues to show resilience,” with recent economic data reinforcing expectations of further monetary tightening by the BoE. They point out that the Pound is “roughly unchanged versus the US Dollar since the end of June,” with only the energy-linked CAD and NOK outperforming, alongside the Yen, which has been supported by “yen buying intervention by the MoF, with assistance from the US.” In this context, MUFG argues that “the pound has done well on the back of improving sentiment and evidence of economic resilience.”

That resilience has been underpinned by stronger-than-expected growth figures. MUFG highlights that “the GDP data again was stronger than expected – the m/m gain of just 0.1% was modest but still better than expected, helping the 3mth/3mth rate to 0.7%, 0.2ppt stronger than expected.” They add that the three‑month gain “was helped by services activity,” although the “one-month reading was flat in August and could be a sign of weakening momentum.” Within services, the breakdown “showed consumer-facing weakness,” while a Bloomberg Intelligence survey “indicated vulnerabilities that could see a slowing in the months ahead.”

Those vulnerabilities are already showing up in credit dynamics. MUFG flags that the BoE’s quarterly Credit Conditions Survey “revealed an increase in defaults on credit card debt for the sixth consecutive quarter underlining the increased strains on UK consumers.” Despite this, “these exposures are increasing with consumer credit up GBP 2.5bn in August to a new record high.” MUFG cautions that “if rates remain around these levels, it’s very likely that these figures will deteriorate further in the final quarter of the year.”

As a result, the bank sees a tension between the recent data and the outlook. “So while the backdrop of the economic data has been positive, the outlook does point to increasing risks,” MUFG writes. They note that “the OIS market indicates 100bps of tightening is priced by next September” but reiterate that “we continue to doubt the BoE delivering that, especially following the comments from Chief Economist Huw Pill who stated this week that he is sceptical that the UK will require four 25bp rate hikes.” Even so, MUFG concedes that “it will be difficult for the markets to adjust lower given the global backdrop of higher rates.”

In their view, this leaves the Pound exposed if the global rate environment turns. “In circumstances of a broader move back lower in rates, UK rates could fall more notably,” they argue, warning that “the pound remains vulnerable to signs that recent economic resilience could be undermined by the notable move higher in yields.”

Bailey frustration on inflation keeps GBP supported but cautiousFXS Speechtracker scores this speech at 6.2, slightly below Governor Bailey’s historic 6.4 average, pointing to a marginally softer tone overall. Bailey’s frustration with above-target UK inflation and comments that the economy is “more resilient than we expected, not as strong as we need” lean mildly hawkish, as they keep the door open to maintaining restrictive policy for longer.

However, remarks that it is “too early to form strong views on the strength of 2nd round effects” and that such effects are “subdued” with businesses focused on cost cutting temper the hawkishness. For GBP, the mix suggests limited immediate upside, with support from ongoing inflation concerns but capped by caution over second-round dynamics and external risks such as Middle East-driven moves in UK gilt yields.

Technical Analysis: GBP/USD remains capped under the 100-day SMAIn the daily chart, GBP/USD holds below the 100-day simple moving average (SMA) and thus retaining a capped, mildly bearish near-term bias. Price is hovering just under the upper Bollinger Band, suggesting upside attempts are meeting supply, while the Relative Strength Index (RSI) at 52.4 has turned neutral, hinting that recent recovery momentum is losing traction rather than evolving into a sustained bullish trend.

On the topside, initial resistance level is aligned at the upper boundary of Bollinger Band around 1.3335, with a more meaningful barrier at the 100-day SMA at 1.3390. A daily close above this level could see a rally to the September 9 high of 1.3568. 

On the downside, the Bollinger middle band, a 20-day SMA now around 1.3250, offers the first layer of support ahead of the lower band near 1.3165. A breach of the mentioned level could expose the November 20, 2025 low of 1.3038.  

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling FAQs The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

The Pound Sterling (GBP) advances against the US Dollar (USD) on Friday after Federal Reserve (Fed) Chair Kevin Warsh didn’t provide forward guidance on interest rates, while expectations that the Bank of England (BoE) would hike rates in November supported GBP/USD, pushing it above 1.3350 and registering gains of over 0.61%. Read More...

British Pound hits three-week highs near 1.3350 as the US Dollar tumblesThe British Pound (GBP) appreciates against a weak US Dollar (USD) on Friday as risk appetite improves, with global yields pulling back from highs, and investors reprice Federal Reserve’s (Fed) monetary tightening bets. The GBP/USD has rallied more than 1% over the last two days, breaching the top of the last three weeks' range and hitting session highs at 1.3349 so far. Read More...

GBP/USD Price Forecast: Fits fresh monthly high as bulls retain control above 1.3265The GBP/USD pair attracts some follow-through buyers for the second straight day on Friday, recovering further from the year-to-date low, around the 1.3135 region, touched earlier this week. The momentum lifts spot prices to the 1.3325 area, or a fresh monthly peak during the early European session, and is supported by a combination of factors. Read More...

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that GBP/USD has bounced firmly to 1.3255, invalidating their prior downside-bias call. Short-term momentum allows for further gains, but they doubt a clean break of major resistance at 1.3280 without stronger upside signals. Over the coming weeks, they expect Pound-Dollar to stay range-bound between 1.3170 and 1.3280, with another resistance level at 1.3310 if the upper band is breached.

Pound holds firm within defined range"24-HOUR VIEW: While we indicated yesterday that GBP “could trade with a downside bias,” we held the view that “any decline is likely part of a lower range of 1.3190/1.3235.” Our view was incorrect, and we also underestimated the volatility as GBP rose sharply from 1.3205 to 1.3259. GBP closed on a firm note at 1.3255 (+0.34%). The advance has scope to extend, but with no significant increase in upward momentum, GBP may not break the major resistance at 1.3280. To sustain the momentum, GBP must hold above 1.3230, with minor support at 1.3245."

"1-3 WEEKS VIEW: On Monday (12 Oct, spot at 1.3235), we highlighted that GBP “is expected to trade in a range between 1.3170 and 1.3280.” Although short-term upward momentum has improved somewhat, we will continue to hold the same view for now. Looking ahead, should GBP break above 1.3280, it would likely encounter another firm resistance at 1.3310."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Pound Sterling-Dollar Forecast: UK Policy Clarity Holds Key to Recovery
BofA expects a medium-term Pound Sterling recovery, but UK policy uncertainty and the US Dollar's appeal during a narrow US equity rally complicate the path.
Bank of America's forecast for the Pound to reach $1.45 by the end of 2027 depends on a recovery that has yet to emerge convincingly from recent trading.

GBP/USD was near $1.3250 at the time of writing, up 0.30% on Tuesday, following a 2.10% fall during September.

Latest-Exchange Rates:

Pound to Dollar (GBP/USD): 1.324505 (+0.26%)

Euro to Dollar (EUR/USD): 1.119239 (+0.29%)

Dollar to Yen (USD/JPY): 158.36742 (-0.10%)

BofA's latest Global FX Weekly retains a $1.37 projection for end-2026, alongside the longer-term $1.45 forecast, which stands roughly 9.4% above the latest rate.

Strategists Michalis Rousakis and Claudio Piron write: "Elsewhere, we maintain a constructive medium-term view on GBP but prefer to await greater clarity on UK policies."

Image: GBP/USD 48hr chart

UK resilience helps, but the policy test remains
Its quantitative FX team writes: "UK data have recently surprised consistently to the upside, while growth expectations have been revised materially higher."

Those observations support Sterling's relative appeal, particularly against a Euro weakened by French fiscal concerns, but they do not remove the uncertainty around Britain's own Budget on 28 October.

Higher government borrowing costs can reflect concern about fiscal credibility as well as expectations of monetary tightening.

In his 8 October speech on financial resilience, Bank of England Governor Andrew Bailey warned that doubts about government finances can drive yields higher and tighten financial conditions.

See our analysis of the Budget's spending-credibility test which explores that risk alongside the protection offered by resilient activity.

BofA nevertheless expects the BoE to respond to the inflation threat.

Its central-bank assessment states: "We changed our BoE call- we now expect the BoE to hike twice in Nov '26 and Feb '27 to 4.25% to guard against risks of second round effects, assuming high energy prices persist into early next year and barring big downside surprises in data."

The BoE held Bank Rate at 3.75% in September, with three of its nine policymakers preferring an increase.

The Dollar has support beyond interest rates
A tighter UK stance would not automatically improve Sterling's yield advantage if US policy also became more restrictive.

BofA's Federal Reserve call remains hawkish, although it acknowledges uncertainty about the number of increases still to come: "We maintain our call for a hike at both the Oct and Dec meeting, though we acknowledge the risks is that we may only get one more hike this year".

The bank also sees investment in US technology companies as an important source of Dollar demand.

Adarsh Sinha and Claudio Piron explain why the composition of the stock-market rally matters: "Intuitively, such breadth measures tell us about the US vs. rest of the world prospects, which are key for the USD exchange rate. A broad rally typically reflects a global growth upswing, with cyclical sectors outperforming and growth differentials versus the US narrowing. In contrast, a technology-led rally reinforces the US exceptionalism narrative, attracting capital inflows and supporting the USD."

For GBP/USD, this means a stronger UK economy can coexist with a firm Dollar if international investors continue concentrating their money in US assets.

Rousakis and Piron write: "However, risks continue to accumulate for already nervous markets, including the ongoing Iran war and associated supply shock, rising concerns about the existential risks posed by AI, the apparent intractability of fiscal challenges, renewed trade tensions and, of course, the upcoming US midterms."

BofA therefore distinguishes a broadening equity rally from a general retreat in share prices.

Sinha and Piron write: "Looking ahead, what would a transition away from a narrow rally regime imply? A broadening would be USD negative from both the equity level & breadth effects, most clearly against high beta FX. An equity correction would be more nuanced: the level effect would be USD positive (except vs. JPY) but dampened if the sell-off is concentrated in large cap technology stocks."

A more widely shared global expansion would give the Pound's recovery a different foundation from a brief rise caused by disappointing US figures.

GBP/USD Exchange Rate FAQ
What is BofA's Pound-Dollar forecast?

The bank projects $1.37 at end-2026 and $1.45 at end-2027.

How far is $1.45 above the current rate?

Roughly 9.4% above the 13 October rate of $1.3250.

Does BofA expect UK interest rates to rise?

Its forecast includes November 2026 and February 2027 increases, conditional on persistent energy costs and no major downside data surprises.

The Pound Sterling (GBP) retreats about 0.11% against the Greenback on Monday amid a scarce economic docket on both sides of the Atlantic, but geopolitics continue to drive price action amid developments in the Middle East and the prolongation of the Russia-Ukraine conflict. At the time of writing, GBP/USD trades at 1.3217 after peaking near 1.3261. Read More...

British Pound erases early gains against US Dollar, US CPI in focusThe British Pound (GBP) gives back its early gains against the US Dollar (USD), trading flat at around 1.3235 during the European session on Monday. The GBP/USD pair retreats as the US Dollar recovers morning losses and turns positive, with financial markets turning cautious ahead of the United States (US) Consumer Price Index (CPI) data for September on Wednesday. Read More...

GBP/USD Price Forecast: Edges higher near 1.3250, but technical tone stays bearish below 100-day SMAThe GBP/USD pair trades in positive territory around 1.3240 during the early European trading hours on Monday. The US Dollar (USD) softens against the British Pound (GBP) as markets continue to assess the US Federal Reserve (Fed) rate hike path. An escalating Middle East conflict kept traders wary ahead of key US inflation data later this week that will influence monetary policy. Read More...

Pound to Dollar Forecast: UBS Targets $1.41 as Goldman Sachs Sees $1.28 UBS expects the Pound to recover against the US Dollar, but Goldman Sachs sees renewed weakness as banks diverge over Sterling's prospects for 2027. UBS and Goldman Sachs are pointing in opposite directions for the Pound to Dollar exchange rate in 2027, with targets of $1.41 and $1.28 exposing a disagreement over Sterling's ability to recover.

GBP/USD ended Friday near $1.3233, after losing 2.1% in September.

UBS's 8 October forecasts put the pair at 1.38 in December 2026 and 1.41 in both June and September 2027.

Goldman's 7 October projections allow for little immediate progress, with 1.33 at three months, around January 2027, followed by 1.28 at 12 months, around October 2027.

The longer targets are approximately comparable rather than identical dates, but the disagreement is already evident near the turn of the year.

Crédit Agricole adds a different path: weakness to 1.31 in December 2026 before a recovery to 1.39 by December 2027.

Image: GBP to USD weekly exchange rate chart (5-9 October) UBS recovery depends on a weaker Dollar The latest UBS projections retain the path outlined in our September coverage of its Sterling recovery call.

Its currency table points to a broad retreat in the Dollar, with the Euro also appreciating against the US currency while the Pound makes little lasting progress against the Euro.

Our reading is that the $1.41 target requires a change in the Dollar's fortunes more than a broad reassessment of Sterling alone.

UBS also expects the Bank of England to raise rates to 4.25% by March 2027 and hold them there through September, when its projected Federal Reserve rate midpoint falls to 3.88%.

That would turn the present small US policy-rate advantage into a UK advantage, making Sterling's relative return more attractive.

The BoE's September decision left Bank Rate at 3.75%, although three of its nine policymakers already wanted an increase.

Goldman's lower currency target nevertheless sits alongside a fairly restrained Fed outlook, rather than an expectation of repeated US tightening.

Goldman says: "We expect the Fed to deliver one more 25bp hike in December to a peak policy rate range of 4.00-4.25%, though we see a strong chance that the Fed will ultimately conclude that additional rate hikes are unnecessary."

It also expects US activity to remain resilient: "In the US, we expect real GDP growth of 2.3% on a Q4/Q4 basis in 2026, largely reflecting the continued boost from the AI boom."

UBS and Goldman therefore share a similar near-term Fed peak despite opposite Sterling calls, showing how little the interest-rate forecast alone resolves their currency disagreement.

Crédit Agricole sees UK risks delaying the rebound Crédit Agricole's 9 October assessment is more explicit about why Sterling could struggle first.

"We maintain a cautious GBP/USD outlook from current levels that is consistent with our constructive USD outlook. The GBP could remain a pressure valve for anxious market participants fretting about the impact of persistent stagflation risks on the UK economic, monetary and fiscal outlook."

Weak growth alongside persistent inflation leaves the UK facing a difficult combination: tighter policy can support Sterling's interest-rate appeal while increasing pressure on borrowers and public finances.

The bank sees a near-term test in the coming week's UK output figures: "For starters, we believe that incoming UK data like next week's GDP data for August could highlight the fragility of the economy to tightening financial conditions and persistent stagflationary headwinds."

It nevertheless sees reasons that pessimism may eventually become excessive.

"We also believe that some negatives are already priced into the GBP, especially vs the EUR, however, given that the Eurozone would have to deal with the consequences from the negative energy supply shock in the wake of the Iran war as well. We further note that the GBP is already looking oversold while global investors seem underinvested in UK assets."

On the Dollar side, Crédit Agricole links continued support to investment demand, rather than interest rates alone.

"The USD should remain supported also by persistent portfolio flows linked to the US economic outperformance vs other major economies in Asia and Europe. Robust economic outlook & sticky inflation have already boosted Fed policy rate expectations and the USD's rate appeal, suggesting that positives are already in the price and this could limit the currency upside."

"US policy uncertainty could linger and fiscal dominance fears could resurface as well, but not before the US economy starts to cool down in 2027. Such risks are still more than offset by the AI boom & thus the US exceptionalism narrative and could keep the USD in demand in the next three to six months."

The Pound-Dollar rate could rebound if US consumer confidence weakens, although persistent risk aversion may keep the safe-haven Dollar supported. The Pound US Dollar (GBP/USD) exchange rate slipped to a six-day low on Thursday before bouncing back as volatile bond markets impacted the pairing.

At the time of writing, GBP/USD was trading at $1.3226, up marginally on the day.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.3229 (+0.12%)

Euro to Dollar (EUR/USD): 1.121178 (+0.10%)

Dollar to Yen (USD/JPY): 157.87288 (-0.14%)

DAILY RECAP:

The Pound (GBP) struggled to establish a clear direction on Thursday, with a quiet UK economic calendar leaving Sterling vulnerable to broader market movements.

The Pound moved erratically as UK gilt yields climbed to multi-year highs before easing back from their peaks. The initial jump in borrowing costs unsettled GBP, as higher government financing costs added to the challenges facing the Treasury ahead of the Autumn Budget.

However, the subsequent retreat in gilt yields helped calm some of those concerns, allowing the Pound to recover its earlier losses.

Meanwhile, the US Dollar (USD) was also mixed on Thursday as a shifting market mood left USD without a clear directional bias.

The currency initially firmed amid a deterioration in market sentiment. Risk appetite took a hit as oil prices climbed again following recent attacks on oil tankers in the Strait of Hormuz. At the same time, energy companies in the US shut down some offshore oil and gas platforms in the Gulf of Mexico as an approaching hurricane raised operational risks.

Expectations for higher interest rates around the world added to the pressure on sentiment, while reports that some major tech companies are seeking to raise billions of Dollars through debt also unsettled markets.

However, the market mood improved slightly as the session went on, prompting USD to relinquish its gains.

Near-Term GBP/USD Forecast: US Consumer Confidence in Focus Looking forward, the key data release on Friday will be the latest US consumer sentiment index from the University of Michigan.

Markets expect US household morale to have deteriorated to 47.6 in October, which would be its third consecutive decline and its weakest reading since May. If the data prints as forecast, the ‘Greenback’ may face headwinds.

Meanwhile, market risk appetite will likely continue to play a part in the safe-haven US Dollar’s direction. If investors remain risk averse, the ‘Greenback’ could attract support.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

GBP/USD technical analysis shows the British pound holding a sideways range since November 2025 as the U.S. dollar index hits fresh 2026 highs.

Razan Hilal, StoneX Media Market Analyst, walks through the weekly and daily GBP/USD charts and the scenarios a range exit opens. Daily RSI readings on GBP/USD and EUR/USD are rebounding from oversold levels last seen in November 2025 and 2015 respectively, as the U.S. dollar index sits at overbought daily conditions last seen in 2023.

Fibonacci extensions map staged resistance up to the top of the British pound's consolidation, while a sustained breakdown below support opens a path toward the November 2025 lows.

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of Forex.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by Forex.com.

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GBPUSD: ⬆️ Buy

– GBPUSD reversed from key support level 1.3185

– Likely to rise to resistance level 1.3300

GBPUSD currency pair recently reversed up from the support zone between the key support level 1.3185 (which stopped wave (A) at the end of March and wave (C) at the end of June) and the lower daily Bollinger Band.

The upward reversal from this support zone completed the sharp downward ABC correction (2) from the end of August.

Given the strength of the support level 1.3185 and the oversold daily Stochastic oscillator, GBPUSD currency pair can be expected to rise further toward the next resistance level 1.3300 – former minor reversal high from the end of last month.

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The Pound-Dollar could strengthen if dovish Fed remarks further reduce rate hike expectations, while improving risk appetite may also support Sterling. The Pound US Dollar (GBP/USD) exchange rate fluctuated on Monday amid a shifting market mood.

At the time of writing, GBP/USD was trading at $1.3226, down marginally on the day but up from an earlier low of $1.3192.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.320765 (-0.24%)

Euro to Dollar (EUR/USD): 1.120491 (-0.42%)

Dollar to Yen (USD/JPY): 158.05779 (+0.13%)

DAILY RECAP:

The US Dollar (USD) initially strengthened as markets opened at the start of the week, as a risk-off mood boosted demand for the safe-haven currency.

Sentiment soured amid the ongoing crisis in the Middle East, with shipping traffic in the Strait of Hormuz virtually grinding to a halt on Monday following attacks in the vicinity over the weekend.

However, the mood improved as the session unfolded. Markets took encouragement from the recent sharp repricing in Federal Reserve interest rate bets, following Friday’s weak payrolls data.

This pullback in Fed bets also weighed directly on the US Dollar, seeing it quickly trim its initial gains.

Meanwhile, the increasingly risk-sensitive Pound (GBP) slipped against the US Dollar during the early hours of Monday morning amid the risk-off market mood.

Sterling was able to regain lost ground later on, however, thanks in part to the UK’s final services PMI. September’s survey was revised slightly higher, printing at 52.1 versus the preliminary 51.7. Although this was still a slowdown from August’s 52.5, the better-than-expected figures aided GBP.

Near-Term GBP/USD Forecast: Fed Speeches to Dent the Dollar? Looking forward, two Federal Reserve officials are due to speak on Tuesday – Michelle Bowman and John Williams. Both policymakers are considered to be on the dovish end of the spectrum, so their comments could dent USD, if they suggest that they won’t support an interest rate hike this month.

Meanwhile, the data calendar for GBP is quiet, which may limit movement in the Pound.

Market risk appetite may also influence the GBP/USD exchange rate. A risk-off mood would likely support the safe-haven Dollar, while an improvement in market sentiment could underpin the increasingly risk-sensitive Pound. Any shifts in risk appetite could also drive fresh volatility.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Pound-Dollar could remain under pressure if Fed hike bets stay elevated, although weaker US durable goods orders may offer Sterling some respite. The Pound US Dollar (GBP/USD) exchange rate fell to a three-month low on Thursday as Federal Reserve interest rate hike bets boosted USD.

At the time of writing, GBP/USD was trading at $1.3226, having bounced off its lowest point of $1.3215 but still down on the day.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.321538 (-0.17%)

Euro to Dollar (EUR/USD): 1.136745 (-0.12%)

Dollar to Yen (USD/JPY): 158.93551 (+0.42%)

DAILY RECAP:

The US Dollar (USD) remained strong on Thursday as markets continued to price in more muscular action from the Federal Reserve to tame inflation.

Hawkish Fed bets were boosted by Wednesday's forecast-smashing PMI releases, which fuelled beliefs that the American economy may be running hot.

On Thursday, an unexpected decline in initial jobless claims added to Fed hike bets.

Markets now see a greater than 50% chance that the Federal Reserve will deliver 50 basis points of tightening by the end of the year.

Meanwhile, the Pound (GBP) struggled as Fed rate hike bets triggered turmoil in global bond markets.

This raised concerns about the UK’s tough fiscal position ahead of the Autumn Budget, amid reports that the Treasury will look to reduce its fiscal headroom to avoid raising taxes.

Additionally, weaker-than-expected figures from the Confederation of British Industry (CBI) weighed slightly on the Pound, although the impact was limited.

Near-Term GBP/USD Forecast: US Durable Goods Orders to Dent the Dollar? Looking forward, Friday brings the latest US durable goods orders figures. An expected contraction in August could dent USD.

However, the ‘Greenback’ could remain supported if hawkish Federal Reserve interest rate bets continue to boost USD demand.

In addition, market risk appetite could influence the GBP/USD pairing, with the safe-haven US Dollar potentially drawing support from a risk-off mood. Geopolitical tensions and worries about higher global borrowing costs could dampen risk appetite and support the American Dollar.

Meanwhile, a lack of UK economic data means Sterling may also be primarily influenced by wider market trends, including risk sentiment, bond market movements, and domestic headlines.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

GBP/USD rose to 1.3552 on Thursday, reaching its highest level since 29 August. The pound strengthened despite oil prices rising above 100 USD per barrel and a further escalation in Middle East tensions.

The main source of support for sterling remains a reassessment of the Bank of England’s monetary policy outlook. Investors do not expect the Bank to raise interest rates at its next meeting, but markets are pricing in at least two rate hikes by March next year, with about a 40% probability of a third increase. By comparison, investors currently expect only two rate hikes from the Federal Reserve over the same period.

The UK inflation backdrop is also reinforcing expectations of tighter monetary policy. Consumer price inflation accelerated to 2.9% in July, up from 2.6% the previous month. At the same time, rising oil and gas prices are putting additional pressure on the UK economy, which remains heavily dependent on imported energy.

However, the Bank of England is seeking to temper increasingly aggressive market expectations. Governor Andrew Bailey has stressed that further monetary tightening is not guaranteed. Elevated oil prices and fiscal risks ahead of the autumn Budget are adding to the uncertainty.

Against this backdrop, the pound may retain some support, but the scope for further gains remains limited for now.

GBP/USD technical analysis

On the H4 GBP/USD chart, the market has nearly reached the local target of the current upward move at 1.3566 and is forming a narrow consolidation range below this level. The range has so far expanded downwards to 1.3533.

A breakout below the range could open the way for a move lower towards 1.3527. If the price breaks above the range instead, a corrective move towards 1.3572 cannot be ruled out.

Further downside could bring the market towards the broader bearish target at 1.3452.

The MACD indicator supports this scenario. Its signal line remains above zero and points firmly upward.

On the H1 GBP/USD chart, the market has formed a tight consolidation range around 1.3523. The range has expanded downwards to 1.3520 and upwards to 1.3566.

The next expected move is a decline towards 1.3527.

The Stochastic oscillator also supports the short-term bearish scenario. Its signal line is above 80 and is pointing sharply downwards. In the short term, a move towards 20 is expected.

GBP/USD outlookSterling remains supported by expectations that the Bank of England could maintain a tighter monetary policy stance than the Federal Reserve over the coming months. Persistent inflationary pressures reinforce this view, although rising energy prices and uncertainty around the UK fiscal outlook remain significant risks.

From a technical perspective, GBP/USD is approaching key resistance around 1.3566–1.3572. Failure to break decisively above this zone could trigger a correction towards 1.3527, with 1.3452 emerging as the next downside target if selling pressure intensifies.

The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027. The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.3534 (-0.46%)

Euro to Dollar (EUR/USD): 1.158209 (-0.61%)

Dollar to Yen (USD/JPY): 160.10118 (+0.50%)

That leaves Cable well below its August high at 1.3675, but UBS has made no retreat from its bullish medium-term Sterling path.

Its updated forecast table reads: “GBP/USD: 1.40 Dec 2026, 1.41 Mar 2027, 1.41 Jun 2027, 1.41 Sep 2027.”

The rationale was set out more fully by UBS strategists Constantin Bolz and Dominic Schnider earlier this month.

“UK politics have shifted from a headwind to a potential tailwind,” they said, while “[Pound] Sterling remains relatively under-owned.”

That under-ownership matters if investors return after Friday's Dollar-driven correction.

UBS has also argued that “long-dollar positioning remains vulnerable to a reversal”, creating scope for “existing long-dollar positions [to] be unwound” if Fed expectations soften again.

Friday went the other way.

Warsh pushed the implied probability of a September Fed hike from around 35% before his speech to 57.5%, while Sterling suffered its first weekly decline against the Dollar in more than a month.

We previously examined UBS's increasingly positive Sterling view before the Jackson Hole reversal.

The forecast now has a cleaner test: holding around 1.35 would leave the 1.40 year-end scenario plausible, while renewed Fed tightening pressure would make the first hurdle, around 1.38, considerably harder to clear.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Pound Sterling jumped to $1.3675 after UK services activity unexpectedly accelerated, adding to signs that the economy is holding up better than feared. The Pound to Dollar (GBP/USD) exchange rate surged to an intraday high of 1.3675 on Friday after a much stronger-than-expected UK services survey delivered a fresh positive surprise for Sterling.

The S&P Global flash PMI survey showed the UK Services PMI rising to 52.8 in August from 52.1 in July, its strongest reading for six months and well above the 51.8 consensus in a Reuters poll.

The composite PMI also strengthened to 52.5 from 52.2, compared with expectations for 51.6, while manufacturing eased to 51.5 from 51.9.

GBP/USD later eased back to around 1.3656 by late morning, still 0.09% higher on the day and 0.91% stronger over the previous five sessions.

Pound Sterling reaction around the 09:30 BST UK Services PMI release, showing GBP/USD and GBP/EUR. Services Surprise Strengthens the UK Resilience Story S&P Global said the survey was consistent with UK GDP growth of around 0.3% in the third quarter, with services benefiting from better domestic conditions, favourable weather and technology investment.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “The expansion is being helped by sunny weather and tech investment”.

There were still reasons for the Bank of England to remain cautious. Employment continued to fall and price pressures picked up again as higher energy costs fed into business expenses.

The combination leaves the BoE facing stronger activity alongside persistent inflation risks, reducing the urgency for any near-term policy easing.

For GBP/USD, the fresh 1.3675 high is now the immediate resistance point. A sustained break above that area would put the 1.3700 level in focus, while a retreat below 1.3600 would suggest the post-PMI momentum is beginning to fade.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

GBP/USD surged to 1.3613 on Wednesday, reaching a three-month high. Investors are digesting fresh UK inflation and labour market data.

Consumer inflation accelerated to 2.9% in July, up from 2.6% in June and in line with forecasts. Core inflation held steady at 2.6%. Following the release, markets slightly scaled back expectations of a Bank of England rate hike before year-end.

Earlier labour market data showed unemployment holding at 4.9%, above expectations, while the number of payrolled employees fell by 86,000 year-on-year. Meanwhile, growth in regular pay remained fairly stable at 3.5%.

Additional support for the pound is coming from a weaker dollar. Soft US economic data have led investors to reduce expectations of further Federal Reserve tightening. At the same time, elevated oil prices and uncertainty surrounding the US–Iran conflict continue to pose inflation risks for the UK.

Technical analysis

On the H4 GBP/USD chart, a wide consolidation range is forming around the 1.3523 level. The market has moved towards its upper boundary. A new compact consolidation range is expected to form below 1.3631. A downside breakout from this range would open the way for a move lower towards 1.3500. The MACD supports this scenario, with its signal line above zero and beginning to turn downwards.

On the H1 chart, the market has formed a compact consolidation range around the 1.3607 level, currently extending between 1.3588 and 1.3618. A move lower towards 1.3572 is expected, followed by a move higher to 1.3600. The Stochastic oscillator confirms this scenario, with its signal line below 80 and trending downward towards 20, indicating short-term downside pressure.

ConclusionGBP/USD has climbed to a three-month high, supported by a weaker dollar and UK economic data that largely met expectations. Inflation accelerated to 2.9% in July, while core inflation held steady, prompting markets to slightly lower BoE rate hike expectations. Labour market data showed unemployment above forecasts and a decline in payroll employment, though wage growth remained stable. The dollar remains under pressure from soft US data, which has reduced Fed tightening expectations. However, elevated oil prices and geopolitical uncertainty continue to pose inflation risks for the UK. Technically, the pair may see a short-term pullback towards 1.3572, with potential for a further decline to 1.3500. The near-term direction will depend on upcoming economic releases and central bank signals.

Pound Sterling is pressing August highs as firmer yield spreads and fading bearish hedges support Scotiabank's bullish GBP/USD view. The Pound to Dollar (GBP/USD) exchange rate is pushing back towards its August highs, trading around 1.3545 early on Monday after reaching 1.3560 last week.

Scotiabank sees a stronger underlying backdrop for Sterling than the relatively modest price move suggests.

“The pound is up 0.3% vs. the USD and threatening a break of this week’s local high in the mid-1.35s,” the bank said.

Yield spreads are helping. Scotiabank notes that UK-US spreads have extended their recent recovery, offering fresh fundamental support for GBP at the same time as demand for protection against Sterling weakness has eased.

The options market is telling a similar story.

“Risk reversals are extending their recovery and fading the premium for protection against GBP weakness,” Scotiabank said, linking the move to “a sustained improvement in the market’s perception of moderating political risk.”

That gives the latest advance a broader base than simple Dollar weakness.

Image: GBP/USD one-month chart GBP/USD has recovered strongly from its late-July low below 1.33, with the pair now trading above its rising 20-day moving average and close to the top of its one-month range.

Bank of England communication has also remained supportive.

Scotiabank highlighted comments from BoE Chief Economist Huw Pill which “reaffirmed a call for higher rates”, helping to keep Sterling's rate backdrop constructive despite a relatively quiet UK data calendar.

Short-Term GBP/USD Outlook: 1.3600 Is the Next Test Scotiabank's technical view has turned firmly bullish.

“The RSI has climbed to a fresh local high in the lower 60s, threatening the July high,” the bank said. “The gains are suggestive of renewed bullish momentum and a potential break of the midweek high just below 1.3550.”

That level has effectively already come under pressure, with GBP/USD reaching 1.3560 during the latest advance.

Scotiabank sees additional resistance at 1.3600 and then 1.3650, while retaining a near-term trading range of 1.3480-1.3580.

Image: Pound-to-Dollar exchange rate performance over 2016 GBP/USD remains well below its January high near 1.3860, but the latest recovery has carried spot above both its 20-day and 50-day moving averages and back into positive territory for 2026.

The immediate question is whether Sterling can convert improving positioning and yield support into a clean move through the mid-1.35s.

Scotiabank's signals suggest the pressure is building.

A sustained break above 1.3550 would bring 1.3600 quickly into view, while 1.3480 marks the lower edge of the bank's preferred near-term range.

For Pound Sterling bulls, the balance has shifted from defending 1.35 to testing how far above it the market can go.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Referenced assets

Key takeaways Sterling stays firm: GBP/USD remains in a short-term uptrend above 1.3479 after breaking above its medium-term descending trendline post-NFP.US CPI is the key catalyst: A hotter-than-expected core CPI could revive Fed-hike bets and pressure GBP/USD, while softer inflation may extend sterling’s rally.1.3479 is pivotal support: Holding above it keeps 1.3547, 1.3580 and 1.3643 in focus; a break below exposes 1.3440 and 1.3400. The sterling pound has been one of the best-performing major currencies against the US dollar in the past five trading sessions.

The USD/GBP cross rate has tumbled by 0.38% (a 0.38% gain for GBP against USD) at the time of writing, slightly above USD/CAD, which recorded a 0.56% loss over the same period (see Fig. 1).

Fig. 1: 5-day rolling performances of USD against major currencies as of 12 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.

Fig. 1: 5-day rolling performances of USD against major currencies as of 12 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Macro divers: inflation trajectory versus Fed pricing Market sentiment remains closely tied to incoming inflation data as investors gauge whether the Federal Reserve will resume rate hikes later this year. Following recent mixed labour market signals, pricing for the September FOMC decision sits close to a coin toss (based on latest data from the CME FedWatch tool, the Fed funds futures market is only pricing in a 48.1% chance of a 25-bps hike, down from around 70% chance a week ago).

Hot CPI scenario (Core YoY > 2.5%): A surprise to the upside, driven by core goods price pass-throughs, would likely trigger a hawkish repricing in US short-term Treasury yields. This would provide a strong tailwind for the US Dollar Index, exposing GBP/USD to a rapid downward repricing toward the 1.3400 psychological level (also near the 20- and 200-day moving averages).Soft CPI scenario (Core YoY ≤ 2.5%): Confirmation of easing services inflation and softer shelter costs would give the Fed breathing room. A softer dollar would reinforce risk appetite, pushing GBP/USD above near-term hurdles toward multi-month highs.Let’s now decipher the near-term (1 to 3 days) outlook on the GBP/USD from a technical analysis perspective

Oscillating within minor ascending channel after a bullish breakout ex-post NFB

Fig. 2: GBP/USD minor trend as of 12 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.

Fig. 2: GBP/USD minor trend as of 12 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. The price action of GBP/USD has cleared a significant medium-term hurdle after staging a bullish breakout ex-post the US NFP release (a major risk event on Friday, 7 August 2026), above its former descending trendline resistance from the 28 January 2026 high/52-week high.

In addition, it continues to oscillate within a minor ascending channel in place since the 29 July 2026 low of 1.3279, with a current bullish momentum reading on the hourly RSI (see Fig. 2).

These observations suggest that GBP/USD is oscillating within a short- to medium-term uptrend.

Watch the 1.3479 key short-term pivotal support to maintain a near-term bullish bias for the next intermediate resistances to come in at 1.3547, 1.3580 and 1.3643 (also a Fibonacci extension).

On the flip side, a failure to hold and an hourly close below 1.3479 invalidates the minor bullish impulsive up-move sequence, triggering a minor corrective decline towards the next intermediate supports at 1.3440 and 1.3400.

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About the Author

Kelvin Wong Senior Market Analyst

Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.

Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.

Pound-Dollar could extend its recovery if US labour market data weakens further, although stronger ISM surveys may help steady the Greenback. The Pound to US Dollar (GBP/USD) exchange rate climbed to a 15-day high last week as investors scaled back Federal Reserve rate hike expectations following softer US economic data and the latest central bank decisions.

At the time of writing, GBP/USD was trading around $1.3483, up approximately 1% over the week.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.347555 (-0.05%)

Euro to Dollar (EUR/USD): 1.153631 (+0.06%)

Dollar to Yen (USD/JPY): 156.42647 (-0.65%)

Image: GBP/USD monthly returns WEEKLY RECAP:

The US Dollar (USD) opened the week on a firm footing as a cautious market mood boosted demand for the safe-haven currency.

Trading remained subdued until Wednesday evening, when the Federal Reserve left interest rates unchanged by a 9-3 vote and adopted a broadly neutral tone.

Following the decision, markets pared back expectations for further Fed interest rate hikes this year, triggering broad-based US Dollar weakness.

Image: GBP/USD 1-month chart performance Share article

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Selling pressure intensified on Thursday after second-quarter US GDP growth slowed to 1.5%, missing expectations and decelerating from 2.1% in the first quarter.

At the same time, the latest core PCE price index suggested inflation cooled modestly in June, adding to expectations that the Fed may be in no hurry to tighten policy further.

An improving market mood also kept the safe-haven US Dollar under pressure into the end of the week.

Meanwhile, the Pound (GBP) traded without clear direction during the first half of the week ahead of the Bank of England's policy decision.

The BoE announcement provided modest support for Sterling, although gains were uneven as investors assessed the voting split and Governor Andrew Bailey's comments.

Policymaker Catherine Mann joined two colleagues in voting for an interest rate increase after previously supporting unchanged policy, while Bailey reiterated there was little evidence that inflation was becoming entrenched in the UK economy.

After a soft start on Friday, Sterling recovered after Chancellor John Healey confirmed the date of the Autumn Budget and reiterated the government's commitment to maintaining its fiscal rules, helping reassure investors.

Image: Pound-to-Dollar exchange rate forecast consensus range as of August 2026 Share article

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Near-Term GBP/USD Forecast: Non-Farm Payrolls Report in Focus Looking ahead, the US ISM manufacturing and services PMIs on Monday and Wednesday are expected to provide the first major clues on the health of the US economy.

If both surveys point to improving business activity, the US Dollar could regain some support.

However, the week's key release will be Friday's US non-farm payrolls report.

A stronger-than-expected increase in employment could revive support for the Greenback, although any further rise in the unemployment rate may offset the positive impact.

Meanwhile, the UK's final services PMI on Wednesday is the main domestic release for Sterling. Confirmation that the UK's dominant services sector returned to growth in July could provide additional support for the Pound.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

UK economists expect the GBP/USD exchange rate to retreat in the near-term outlook as steady BoE rates and doubts over the durability of hawkish policy guidance weigh on Pound Sterling. The Pound to Dollar exchange rate (GBP/USD) traded around 1.3443 on Friday morning after gaining more than 1.3% over the previous two sessions.

GBP/USD closed Thursday at 1.3461, leaving the pair 1.6% higher for July but still below the month’s 1.3558 peak.

Rabobank expects that recovery to fade, forecasting Cable in a 1.32–1.33 range over the next one to three months.

The bank’s argument is that markets have already tightened UK monetary conditions on the Bank of England’s behalf by pricing further rate increases and pushing borrowing costs higher.

“In RaboResearch’s view, the heavy lifting done by the market may help the Bank avoid an actual hike in policy rates,” Rabobank said.

Thursday’s BoE decision reinforced that possibility. Bank Rate remained at 3.75%, despite three policymakers voting for an immediate increase.

The vote looked hawkish, but the majority still preferred to wait for clearer evidence that higher energy costs were feeding into wages and domestic prices.

Rabobank believes markets will initially continue “taking the BoE’s hawkish rhetoric at face value and maintain its expectations of rate hikes”.

The risk is that investors eventually demand action.

The bank questioned whether another unchanged decision could cause markets to doubt whether the Monetary Policy Committee is “truly focused on its inflation mandate”, particularly if policymakers continue talking tough without raising rates.

Image: GBP/USD median bank forecast path showing a near-term fall towards 1.33 before a longer-term recovery The latest Exchange Rates UK forecast survey poll, see chart above, broadly supports Rabobank’s near-term caution. The median bank projection falls to around 1.33 by the end of the third quarter before recovering gradually through 2027 and moving above 1.40 in late 2028.

Rabobank is less convinced about the Pound’s medium-term prospects.

“Further out we see risk that UK fiscal concerns will combine with steady BoE rates to weigh on the pound,” the bank said.

The UK labour market remains central to that view. Before the energy shock, weaker employment conditions had supported expectations that the BoE would cut rates this year.

Recent signs of stabilisation have complicated the picture and may increase the risk of “second order price effects” as oil prices rise again.

Rabobank said stronger labour data or “another ramp higher in UK CPI inflation data” could increase pressure on the Bank “to put its money where its mouth is”.

Near-Term GBP/USD Forecast: Rabobank Targets 1.32–1.33 as BoE Credibility Faces a Test Rabobank’s range implies that Thursday’s move above 1.34 will not be sustained.

A decline to 1.33 would reverse much of the latest rally, while 1.32 would return Cable towards the lower part of its recent trading range.

The Dollar side is also important. Sterling benefited when short-term US yields and the greenback fell after the Federal Reserve held rates steady, but Rabobank does not view that as enough to secure a lasting Pound advance.

Its central judgement is that the BoE may continue using hawkish language while avoiding an actual increase.

That strategy can support Sterling only while markets believe a hike remains credible. Rabobank’s 1.32–1.33 forecast suggests that confidence will become harder to maintain.

The Pound-Dollar rate could remain under pressure unless the Bank of England delivers a sufficiently hawkish message after an inconclusive Federal Reserve decision. The Pound to US Dollar (GBP/USD) exchange rate weakened on Thursday morning as markets turned their attention to the Bank of England following a divided Federal Reserve policy decision.

GBP/USD retreated towards $1.3345 during early European trading, extending its recovery from Wednesday’s pre-Fed lows but remaining under pressure from renewed safe-haven demand for the US Dollar.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.333627 (-0.23%)

Euro to Dollar (EUR/USD): 1.144507 (-0.19%)

Dollar to Yen (USD/JPY): 163.59918 (+0.17%)

Federal Reserve Holds Rates but Offers Little Guidance The Federal Reserve left interest rates unchanged at 3.50%–3.75% on Wednesday, in line with the majority of economists’ forecasts.

The decision was nevertheless more divided than expected, with three policymakers voting for an immediate 25-basis-point rate increase because of persistent inflation risks.

Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to returning inflation to its 2% target but provided few firm clues over the timing of any future policy move.

Warsh indicated that further tightening could be required if inflation pressures remained elevated, although he resisted offering the explicit forward guidance markets had become accustomed to under previous Fed leadership.

The initial market response was mixed. Short-term Treasury yields declined as investors reduced expectations of a September rate rise, while long-term yields climbed sharply amid concerns that the Fed was not acting decisively enough to contain inflation.

The Dollar initially weakened following the announcement but recovered during Asian trading as renewed US attacks on Iranian targets increased demand for defensive assets.

Pound Sterling Awaits Bank of England Guidance Attention now turns to Thursday’s Bank of England interest-rate announcement.

The Monetary Policy Committee is widely expected to leave Bank Rate unchanged at 3.75%, placing the focus on the vote split, updated economic forecasts and Governor Andrew Bailey’s comments.

UK inflation fell to 2.6% in June, but policymakers continue to face uncertainty over the impact of elevated oil and gas prices on household costs and inflation expectations.

Markets have priced a meaningful risk of higher UK interest rates during the coming year, although economists remain divided over whether the Bank will ultimately need to tighten policy.

A hawkish vote split or a warning that renewed energy-price pressures could make inflation more persistent would offer the Pound support.

Sterling could struggle, however, if the Bank emphasises weak domestic growth, slowing private-sector wages or the risk that tighter financial conditions will weigh on the economy.

Near-Term GBP/USD Forecast: BoE Tone to Determine Next Move The near-term Pound-Dollar outlook is likely to depend heavily on whether the Bank of England validates or pushes back against expectations for future rate increases.

A hawkish BoE announcement could allow GBP/USD to recover towards the $1.3400–$1.3430 area.

A move above this zone would ease immediate downside pressure and potentially bring $1.3480 back into view.

Conversely, a cautious policy statement or a less hawkish vote than markets expect could drive the Pound back towards $1.3300.

A sustained break below $1.3300 would expose the recent lows around $1.3220.

The Dollar will also remain sensitive to developments in the Middle East, with any further escalation likely to increase safe-haven demand and maintain upward pressure on global energy prices.

Later in the week, the latest US GDP figures could also influence the pair. Stronger-than-expected second-quarter growth would reinforce expectations that the US economy can withstand elevated interest rates and could provide additional support for the Dollar.

Rabobank expects renewed pressure on Pound exchange rates as concerns over Prime Minister Andy Burnham’s spending plans unsettle the gilt market. The British Pound concluded this trading week facing a difficult combination of political uncertainty, elevated UK bond yields and doubts over how the new government intends to fund its policy agenda.

UK economists at Rabobank say the initial market response to Burnham’s cabinet and early policy announcements has been notably cautious.

Latest — Exchange Rates:

Pound to Euro (GBP/EUR): 1.171822 (+0.14%)

Pound to Dollar (GBP/USD): 1.332498 (+0.09%)

Euro to Dollar (EUR/USD): 1.137117 (-0.05%)

The UK 10-year gilt yield has moved above 5.0%, while Pound Sterling has ranked as the weakest G10 currency over the latest one-day period.

Although the appointment of an experienced Chancellor has offered some reassurance, the bank warns that uncertainty surrounding the government’s fiscal strategy could keep both gilts and the Pound under pressure.

Rabobank analysts expect EUR/GBP to rise to 0.8650 over the next three months and sees scope for GBP/USD to fall back towards 1.3200.

At current rates, those forecasts imply a weaker Pound against both the Euro and the US Dollar.

Rabobank Warns Burnham’s Honeymoon Could Be Brief Rabobank says the appointment of Healey as Chancellor is a stabilising factor because the country’s finances have been placed in the hands of an experienced politician with previous Treasury exposure and respect across Parliament.

However, the larger question is how Burnham plans to finance his agenda.

The Prime Minister has said he intends to use “flexibility” within the fiscal rules, which Rabobank says could point towards placing some infrastructure-related debt on the balance sheets of public financial institutions.

Although such borrowing might sit outside the most closely watched fiscal measures, it would still need to be absorbed by the bond market.

“The market will be wary about whether this constitutes ‘back door’ funding,” Rabobank says.

The government’s first cost-of-living measure is a reduction in VAT on household electricity bills from October.

Officials have indicated that the measure will be funded by cancelling the previous government’s digital identity programme, although reports have raised doubts over whether that scheme was fully funded in the first place.

Rabobank notes that use of greater flexibility within the fiscal rules could potentially mobilise an additional £16 billion for infrastructure projects over the remainder of the decade.

Infrastructure investment could improve productivity in parts of the UK outside London and the South East, but those benefits may take years to materialise.

Burnam, by contrast, faces a general election in less than three years.

That leaves the government under pressure to deliver visible improvements quickly, increasing the risk that spending commitments expand before the economic benefits become apparent.

“The market is now bracing itself for a list of further announcements,” Rabobank says.

“This suggests that funding issues will remain at the fore of the market’s mind and hints that Burnham’s honeymoon may be short-lived.”

Gilt Market Particularly Sensitive The latest UK borrowing figures were slightly better than expected for June, but borrowing over the first three months of the fiscal year remains above projections from the Office for Budget Responsibility.

At an early stage of the financial year, that overshoot might ordinarily attract limited attention.

Rabobank argues that the political backdrop makes investors more sensitive than usual.

Burnham is associated with the softer left of the Labour Party and has said he wants government to become less reliant on what he described as the “imperial” Treasury.

Against this backdrop, the bond market is likely to demand clear reassurance that new spending plans will remain compatible with the fiscal rules.

Rabobank also highlights structural vulnerabilities in the UK economy.

The country has a low household savings ratio and a substantial current-account deficit, increasing its dependence on overseas capital.

These characteristics can amplify market reactions when confidence deteriorates.

“The UK may not have the largest debt-to-GDP ratio in the developed world, but arguably it has one of the most sensitive debt markets,” Rabobank says.

Lower BoE Expectations Are Another Pound Risk The reduction in VAT on household electricity bills should mechanically lower inflation.

Rabobank also expects headline UK CPI inflation to ease to 2.7% year on year, offering some short-term reassurance to the gilt market.

The inflation outlook remains complicated by higher spot energy prices following the escalation in the US-Iran conflict, but Rabobank believes current Bank of England pricing is too aggressive.

Markets are pricing approximately 43 basis points of BoE tightening over the next six months.

Rabobank expects the central bank to avoid raising rates this year.

“On our view, this is overdone and a reduction in market expectations for BoE policy tightening is another headwind for the pound,” the bank says.

This is important because elevated UK interest-rate expectations have provided Sterling with some protection against fiscal and political concerns.

Were investors to remove those expected rate increases, the Pound would lose part of its yield advantage at the same time as the gilt market remains uneasy about government borrowing.

Image: Exchange Rates UK Research polling shows GBP/USD median bank forecast chart showing the live rate near 1.3325, a Q3 median near 1.32 and the longer-term forecast path GBP/USD Forecast: 1.3200 Comes Back Into View GBP/USD ended the latest session around 1.3325, recording a modest daily gain after Thursday’s 0.47% decline.

The pair has nevertheless fallen by more than two cents from the 15 July close near 1.3540 and remains well below July’s high of 1.3558.

The short-term chart shows Sterling attempting to stabilise around 1.3320 after repeated failures to sustain advances above 1.3340.

GBP/USD is trading close to the 20-period moving average at 1.3327 and session VWAP near 1.3323.

That positioning suggests the pair is currently balanced around its immediate fair-value area rather than developing a strong recovery.

The 200-period moving average near 1.3340 remains the more important overhead barrier.

A recent rebound failed close to that level, confirming the 1.3340-1.3350 region as the first substantial resistance zone.

RSI has recovered to approximately 48 from below 40, showing that downside momentum has eased.

However, the indicator remains below 50 and does not yet signal that buyers have regained control.

Initial support is located around 1.3310, followed by 1.3290.

Rabobank’s 1.3200 objective would come into clearer view following a break below these levels, while July’s low at 1.3221 represents a significant intermediate support area.

On the upside, a sustained move above 1.3340 would reduce immediate downside pressure, although GBP/USD would still need to recover through 1.3400 to suggest the broader July correction has ended.

Image: GBP/USD 15-minute chart with 1.3310 support, 1.3340 resistance and Rabobank’s 1.3200 forecast marked The median bank forecast path also points to near-term weakness before a later recovery.

The Q3 2026 median projection is close to 1.3200, broadly matching Rabobank’s three-month forecast, while the consensus path then rises towards 1.35 in early 2027 and approximately 1.38 by the end of that year.

Rabobank’s view is therefore consistent with the wider consensus in anticipating near-term pressure, although it does not rule out a longer-term recovery.

Image: EUR/GBP survey poll forecasts July 2026 EUR/GBP Forecast: Rabobank Targets 0.8650 EUR/GBP closed around 0.8534 after falling 0.14% in the latest session.

The cross has recovered from July’s low near 0.8455, but remains almost 1% lower for the month and below the July opening level near 0.8614.

The 15-minute chart shows that EUR/GBP has surrendered part of its recent rebound after failing above 0.8550.

The cross is trading close to its 20-period moving average near 0.8533, but remains below session VWAP around 0.8541 and beneath the 200-period moving average near 0.8539.

This leaves the immediate technical picture mixed.

The latest recovery from below 0.8530 shows that selling pressure has moderated, while RSI near 46 has moved above its signal line.

However, the cross remains below the neutral 50 level and has yet to overcome the main intraday resistance cluster.

Initial resistance is located around 0.8539-0.8542, followed by 0.8547 and the recent highs around 0.8550-0.8555.

A break through that area would strengthen the case for a return towards 0.8600.

Rabobank’s 0.8650 forecast lies above the current technical range and would require a more decisive deterioration in Sterling sentiment.

On the downside, support is located around 0.8530, followed by 0.8525.

A break below these levels would weaken the immediate recovery and raise the risk of a renewed move towards 0.8500.

Image: EUR/GBP 15-minute chart with 0.8530 support, 0.8550 resistance The wider bank consensus also leans towards a higher EUR/GBP rate over the coming quarters.

The median forecast stands close to 0.8700 from the third quarter of 2026 through early 2028, before easing towards 0.8600 and then 0.8450 by the end of 2028.

Rabobank’s 0.8650 target is therefore slightly below the near-term consensus median but still implies a meaningful Sterling decline from current levels.

Pound Sterling: Rabobank’s forecasts leave GBP exposed on two fronts Against the Euro, the bank expects EUR/GBP to rise towards 0.8650 as investors question the government’s fiscal plans and reassess the likelihood of Bank of England tightening.

Against the Dollar, it sees GBP/USD falling towards 1.3200 as political uncertainty, gilt-market sensitivity and lower UK rate expectations weigh on the Pound.

The technical charts show that neither move has yet been fully confirmed.

GBP/USD is attempting to stabilise around 1.3320, while EUR/GBP remains below resistance around 0.8550.

However, the fundamental risks identified by Rabobank remain unresolved.

A reduction in expected BoE tightening would remove an important source of Sterling support, while further spending announcements without a convincing funding plan could renew pressure on gilts.

The base case is therefore for Pound Sterling to remain vulnerable, with a GBP/USD break below 1.3290 strengthening the path towards 1.3200 and an EUR/GBP move above 0.8550 opening the way towards Rabobank’s 0.8650 target.

The UK Office for National Statistics (ONS) will release the June Consumer Price Index (CPI) figures on Wednesday at 06:00 GMT, a print that will matter for markets. Consensus expectations point to inflation pressures still above the Bank of England’s (BoE) target, although losing further momentum.

UK consumer inflation remains one of the most important inputs for the BoE and typically carries real weight for the British Pound (GBP). Following the latest cautious hold by the BoE on June 18, investors now favour a steady hand by the ‘Old Lady’ at its meeting on July 30.

What to expect from the next UK inflation report?Headline UK CPI is expected to clock 2.7% in the year to June, a tad lower than the May reading. On a monthly basis, inflation is seen gaining 0.1%, adding to the 0.2% increase recorded the previous month.

Core inflation, which strips out the more volatile food and energy components and is therefore more closely watched by the BoE, is forecast at 2.5% on an annual basis, down a tenth of percent from May.

How will the UK CPI data affect GBP/USD?The BoE met expectations and kept the bank rate unchanged at 3.75% on June 18. However, the 7–2 vote split carried a slightly more hawkish tone, with Megan Greene joining Huw Pill in supporting a 25-basis-point increase. But the larger message is patience, with policy still firmly in wait-and-see mode and market pricing that reflects that stance.

In his latest comments last week, Governor Andrew Bailey said the renewed hostilities in the Gulf highlighted the instability facing the global economy. Turning to the UK, he argued that the country was supported by both its fiscal framework and monetary policy, while stressing that the central challenge remained economic growth.

Bailey added that the UK’s core banking system was resilient and that debt levels were not overstretched. However, he warned that sustainable economic growth would not be possible without financial stability.

Implied rates currently suggest nearly 43 basis points of tightening by year-end, while consensus sees the central bank keeping its policy rate unchanged at its next gathering on July 30.

Back to technicals, Senior Analyst at FXStreet, Pablo Piovano, notes that the recent multi-week recovery in GBP/USD appears to have encountered some initial hurdle in the 1.3550-1.3560 band near the July tops. “In case bulls regain the upper hand, the next barrier emerges at the May top at 1.3653 (May 11), followed by the YTD ceiling at 1.3868 (January 27)," he adds.

On the downside, Piovano sees initial contention at current yearly lows near 1.3140 (June 24). “Further weakness from here could expose a move toward the November 2025 base at 1.3010 (November 5),” Piovano adds.

Piovano also points out that momentum indicators remain somewhat bullish for now as the Relative Strength Index (RSI) hovers just below 54, while the Average Directional Index (ADX) near 18 suggests the current trend lacks muscle.

Interest rates FAQs Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

Economic Indicator Consumer Price Index (MoM) The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is also the inflation measure used in the government’s target. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

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