GBP/USD Firms as Warsh Dollar Rally Loses Steam
GBP/USD edged higher as the U.S. Dollar softened ahead of U.S. jobs data, while U.K Gilt yields stayed above 5% and kept the BOE rate path in focus.
GBP/USD traded modestly higher on Monday, with Sterling up 0.13% near 1.3548 as the U.S. Dollar eased from Friday’s Warsh-driven spike. Fed hike odds remain elevated after Kevin Warsh warned that the Fed still has work to do on inflation, but traders are now waiting for August payrolls before pressing the U.S. Dollar higher again. The median Reuters forecast is for 55,000 jobs after July’s surprise contraction, so the labor print has real power to reset September Fed pricing.
The U.K. side is still being filtered through gilts and the BOE. The 10-year gilt yield eased slightly to 5.14%, but it remains high enough to keep financial conditions tight and the policy debate uncomfortable. U.K. inflation rose to 2.9% in July, the labor market remains subdued, and markets have pushed the next full BOE hike deeper into 2027 as oil volatility complicates the inflation outlook. GBP/USD caught a bid today, but the move was mostly U.S. Dollar weakness. Sterling still needs calmer gilts and a cleaner U.K. growth story to build anything more durable.
GBP/USD Daily Price History
GBP/USD has pulled back into the first real test of the August breakout. The pair cleared the descending trendline that had capped rallies since the February spike, ran into the upper-1.36s, then faded back toward 1.3550. That puts price right on the line between a healthy retest and a failed breakout near the July swing high. Cable has repaired the chart, but buyers now need to defend the breakout zone.
The key area is 1.3500-1.3550. That zone has the prior breakout, the short-term moving averages, and the first support shelf from the August advance. Hold it, and the broader recovery remains intact. Lose it, and the move starts looking like another false break in a pair that has spent most of the year chopping around trendline resistance. MACD is still positive, but it has rolled over. Stochastics have flushed quickly toward oversold, which says the near-term selling pressure is getting mature, though it has not confirmed a turn yet.
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