File image of Kevin Warsh. Sérgio Garcia/Your Image for ECB. Copyright: European Central Bank 2026.
The British pound has reached the top of its yearly range against the Dollar and the trend behind it is robust enough to clear it.
The Pound-to-Dollar exchange rate has broken through the shelf that capped it all summer and closed last week at a six-month high, arriving at the ceiling of its yearly range with every moving average on the chart now beneath it and rising.
The advance has carried momentum above the level conventionally described as overbought, a reading that argues for a pause somewhere in the coming week without arguing against the direction, because the average structure underneath the market has not yet finished realigning and trends rarely end while that is still in progress.
From a tactical perspective the requirement is a daily close above the range high, and GBP/USD could get the chance based on the outcome of Wednesday's U.S. PCE inflation report, which resets the inflation picture, and Friday's Jackson Hole speech from Federal Reserve Chair Kevin Warsh, which is where this Federal Reserve has generated the most volatility.
Above: GBP/USD daily chart. Image © Pound Sterling Live, chart created with TradingView.
The pair closed Friday at 1.36456 after trading as high as 1.36758, a gain of 0.11% on the day.
Spot now sits above the 21-day moving average at 1.34765 and the 50-day at 1.33947, both of which are rising, with the 21-day climbing steeply since the middle of August.
A daily close above 1.35064 was a constructive technical development, and the market has added a cent and a half on top of it.
That shelf capped every attempt through May, June and July before giving way, which makes it the first meaningful support beneath the market on the old-resistance-becomes-support principle.
Above: GBP/USD daily chart with the 200-day moving average and RSI. Image © Pound Sterling Live, chart created with TradingView.
The 200-day moving average sits at 1.34236 and is rising gently, which places it above the 50-day at 1.33947 and below the 21-day.
The RSI reads 70.90 against its signal line at 61.70, the strongest reading of the year and above the 70 threshold for the first time since February, with the faster line rising and well clear of the slower.
Momentum above 70 with the signal line climbing behind it is confirmation of trend strength; it becomes a warning when the two converge and roll, and they have not.
Resistance is 1.36609, the horizontal drawn from February's highs, which Friday's session traded through intraday before closing below, and CIBC Capital Markets identifies 1.3680 to 1.3690 as the band above it.
Support runs to 1.35064, then to the 1.33020 and 1.32735 pair that framed the July base, then to the year's low at 1.31402.
Our Pound to Dollar forecast is therefore for a break above 1.36609 during the coming week that opens the 1.3680 to 1.3690 band, with any failure at the first attempt producing a pullback towards 1.35064 that would be a correction inside the uptrend rather than an end to it, and only a daily close back beneath 1.35064 changing that reading.
The medium-term picture is a yearly range from 1.31402 to 1.36609 in which the market is testing the upper boundary for the third time since February.
Three rejections at one level means it is being defended, and the case for the fourth attempt succeeding is that this is the first of them made with the 200-day average two cents below and rising beneath the market rather than above it.
Where Next for the Pound? Get the Quarterly Forecast Report
Point forecasts, highs and lows from global banking partners, out to early 2027.
USD Week Ahead: July PCE Lands Two Days Before Warsh Speaks
The July personal consumption expenditures deflator arrives on Wednesday at 13:30, with headline inflation expected to ease to 3.6% from 3.7% and the core rate to hold at 3.3%.
DNB Carnegie expects core PCE to rise 0.2% month-on-month for an unchanged annual rate, and the Norwegian bank notes that consumer and producer prices have already been published, so the print should land close to expectations while still reminding markets that inflation remains uncomfortably high.
The second estimate of Q2 GDP is expected to confirm annualised growth of 1.5% in the same release, with durable goods orders and personal spending alongside.
The Jackson Hole symposium runs from 27 to 29 August under the theme "Financial Innovation: Implications for Payments and Policy", with Warsh scheduled to speak on Friday at 15:00.
This year's theme has less market-moving potential than usual, according to research from DNB Carnegie, which expects the Chair to use the platform to set out his proposed Federal Reserve reforms.
Dollar's Decline Underpinned by Treasury Market Manipulaton
Above: File image of U.S. Treasury Secretary Scott Bessent. Image: Official U.S. Government image.
The greenback's August decline has been driven by a combination of credibility questions about American policy, as well as a softening in the data.
Of the dual drivers, it's the actions of the U.S. government that are proving most relevant, and will continue to do so in the coming days: the dollar fell after the Treasury's bond buyback announcement that sought to cap long-term debt yields.
The move helps cap the long-term debt yield by issuing more shorter-term debt which is anchored at lower levels, but it clearly fails to address why borrowing costs rose in the first place: rising expectations for an increasingly inflationary future.
The only release valve under these circumstances is the dollar.
The market questions the credibility of the Treasury's unanticipated move, says Sarah Ying, Head of FX Strategy at CIBC Capital Markets, who places the episode in a sequence running from January's yen rate checks to the early-August discussion of reduced long-dated issuance.
A currency falling on credibility rather than data cannot be rescued by a data print, which is why Wednesday matters less for this pair than its billing suggests.
The caution from the same source is that Sterling has travelled beyond what the fundamentals justify.
CIBC puts fair value here at 1.35, citing a tepid UK labour market and a Bank of England already in restrictive territory, and expects the Dollar index to find support around 97.80 to 97.90 while retaining a view that the currency weakens into year end.
Westpac is positioned similarly, forecasting 1.35 for both September and December 2026.
Two of the three houses reviewed this week therefore see the market a cent rich, and neither will trade against it, which is the position of an analyst who expects a correction without being able to name its trigger.
Our house view remains that Sterling can outperform through the second half and end 2026 higher against the Dollar.
