GBP/USD Price: Sterling Nears 1.3545 Breakout as Fed Shift Boosts Pound

GBP/USD Rebounds Strongly as Pound Challenges Dollar Resistance

The British pound staged a sharp recovery against the U.S. dollar, with GBP/USD climbing above 1.3520 after touching lows near 1.3391 earlier in the week. Friday’s session was pivotal: dovish commentary from Jerome Powell at the Jackson Hole Symposium confirmed the Federal Reserve’s intention to cut rates in September, sparking broad dollar weakness and fueling demand for sterling. By the weekend close, GBP/USD was trading around 1.3527, comfortably off the week’s trough and testing a descending trendline that has capped rallies since early August.

Technical Landscape Shows Key Levels at 1.3545 and 1.3647

The pair’s near-term trajectory hinges on whether bulls can break 1.3545, where a convergence of resistance has repeatedly stalled gains. A decisive close above this level would confirm a bullish reversal, with upside targets at 1.3595 and 1.3647. On the downside, immediate support rests at 1.3480, followed by deeper cushions at 1.3440 and 1.3390. The 50-period SMA at 1.3470 is providing a firm base, while the RSI is sitting at 68—close to overbought but not yet diverging bearishly. The MACD remains bullish with a widening histogram, reinforcing momentum behind sterling.

Macro Events Driving GBP/USD Ahead

The week ahead brings heavy U.S. data releases that will shape the direction of GBP/USD. Durable goods orders and consumer confidence arrive Tuesday, while Thursday delivers Q2 GDP at an expected 3.1% pace along with weekly jobless claims. Friday’s Core PCE inflation—the Fed’s preferred gauge—will be critical in shaping rate expectations. In the UK, Monday’s bank holiday keeps liquidity light, but traders will be focused on whether sterling can capitalize on broad dollar softness once markets normalize. European CPI will add another layer of influence on overall risk sentiment across currencies.

Sterling Performance in 2025 and Broader Sentiment

The pound has been volatile this year. After touching 1.2177 in January, GBP/USD surged steadily to 1.3789 by July 1, the year’s high, before pulling back to the 1.33–1.34 corridor by late summer. August historically delivers seasonal weakness, with an average monthly decline of -0.49% since 1971, but Powell’s pivot has shifted sentiment sharply. Analysts point to sterling’s resilience despite heavy debt burdens in the UK economy and the Bank of England’s more cautious tone. Still, with the Fed turning dovish, sterling has regained momentum at the upper end of its three-month range.

Institutional Flows and Central Bank Policy Divergence

Markets are now pricing a near-certain 25 basis point Fed cut in September, with some debate on whether another reduction could follow in October. If U.S. growth weakens—GDP misses or jobs continue to soften—calls for deeper cuts will mount, undermining the dollar further. By contrast, the Bank of England has maintained a cautious stance, weighing inflation risks against slowing consumer demand. Traders are split on whether the BoE can deliver multiple cuts this year. This divergence in central bank outlooks is adding to volatility, as markets price sterling’s relative advantage when the Fed eases.

Speculative Range and Year-End Scenarios for GBP/USD

Short-term speculative ranges are centered between 1.3460 and 1.3670. A bearish outcome from U.S. GDP or softer PCE could lift GBP/USD toward the upper bound, with potential to test 1.37 in the coming weeks. Conversely, a stronger-than-expected GDP print risks stalling the rally, sending the pair back toward 1.34. End-of-year forecasts remain widely scattered: ExchangeRates.org sees 1.3342 by December, Wells Fargo points to 1.37, while LongForecast envisions a sharp climb toward 1.45–1.47. On the downside, WalletInvestor models a drift lower to 1.315–1.324 if dollar strength revives.

Market Psychology and Trading Dynamics

Friday’s rebound underscored how fragile sentiment remains. Day traders who positioned bullish earlier in the week endured a sharp drawdown as GBP/USD sank to 1.3391, only to be rewarded with a sudden reversal on Powell’s dovish shift. This volatility mirrors the broader uncertainty facing financial institutions as they adjust to shifting monetary policy signals. With tariffs, inflation, and Fed policy all in flux, intraday swings in GBP/USD will remain violent. European desks opening Monday are expected to immediately challenge Friday’s highs, testing the conviction of sterling bulls.

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