The GBP/USD pair held at 1.3627 on Tuesday, near its highest level since mid-February, as sterling continued to benefit from broad dollar softness following the U.S. Treasury’s decision to at least double purchases of long-term government bonds.
Investors are also monitoring developments around new sanctions against Iran, which could introduce fresh volatility into energy markets and risk sentiment. The week’s primary focus, however, remains on Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole Economic Symposium on Friday, which may provide further clarity on the trajectory of U.S. interest rates.
In the UK, money markets are pricing in a roughly 50% chance of a Bank of England rate hike before the end of the year, with an additional 25-basis-point increase anticipated by early 2027. July inflation data showed headline CPI accelerating to 2.9%—the highest since March—while core inflation rose 2.6%, exceeding expectations. Recent domestic data has also been supportive: business activity, as measured by PMIs, has shown signs of improvement, and consumer confidence reached a two-year high in August.
Despite these positives, risks to the outlook remain. Elevated energy prices and the potential escalation of geopolitical tensions, particularly concerning Iran, could reignite inflationary pressures. The pound’s resilience is also tempered by technical considerations. On the H4 chart, the pair has nearly reached a local resistance target at 1.3672 and is consolidating within a narrow range between 1.3619 and 1.3650. The analysis suggests a new, tighter consolidation range may form below 1.3672. A downside breakout could expose a decline toward 1.3550, with the MACD indicator showing early signs of weakening momentum.
On the H1 chart, the market is trading within a compact range around 1.3640, bounded by 1.3618 and 1.3650. The Stochastic oscillator indicates short-term downside pressure, with its signal line below 50 and trending toward 20. A break below 1.3600 could extend losses to 1.3550.
The near-term direction for GBP/USD will likely hinge on the outcome of Fed Chair Warsh’s remarks and any developments regarding Iran sanctions, with technical levels providing additional guidance for traders.
