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British Pound finds relief as USD pauses, but inflation risks linger

  • GBP/USD rebounds from 1.3209 as the US Dollar rally pauses.
  • UK energy shock lifts expectations for further BoE tightening.
  • Rising US inflation expectations keep Treasury yields elevated.

The Pound Sterling (GBP) trims some of its weekly losses, gaining over 0.18% against the US Dollar (USD) on Friday as the Greenback takes a breather, even as US Treasury yields continue to rise. The jump in energy prices, spurred by the Middle East conflict, and increased Federal Reserve (Fed) hawkish bets for the remainder of 2026 continue to weigh on the Pound. GBP/USD trades at 1.3243 after bouncing off daily lows of 1.3209.

GBP/USD rebounds as BoE hike bets offset persistent global yield pressure

Geopolitics continue to drive market sentiment. Even though newswires reported a potential US-Iran phased deal, officials on both sides, particularly Iranian, delivered harsh comments, threatening to use “different weapons” in the case of another attack. Most US officials were focused on Chinese President Xi Jinping's visit to the US.

US President Donald Trump said that he had a very productive meeting with Xi. The Chinese President said that the US trip was very successful and that he sees a brighter US-China future.

Data-wise, the University of Michigan Consumer Sentiment Index for September fell to a four-month low due to rising inflation concerns, which are eroding households' purchasing power. The index fell from 51.7 in August to 48.1 in September. Inflation expectations for one year rose from 4% to 4.6%, and for a five to ten-year period, ticked up from 3.3% to 3.4%.

Other data showed that core Durable Goods Orders were above estimates in August, while July data was upwardly revised, indicating robust business spending.

In the UK, the jump in Oil prices increased inflationary pressures, pushing investors to price in further tightening by the Bank of England (BoE). Last week, the BoE held rates unchanged but opened the door for rate hikes if inflation continues to surge.

Traders in money markets expect 33 basis points of monetary tightening from the BoE this year, with the odds of a move at the November meeting at 77%, according to Prime Terminal. For 2027, investors eye 105 basis points of tightening by the central bank.

BoE interest rate probabilities - Source: Prime Terminal

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3243, retaining a bearish near‑term bias as spot remains below the latest simple moving average triple around 1.3466 and under a series of broken upward trend lines, which now act as overhead reference at 1.3516 and 1.3723. The downward resistance trend line that previously broke near 1.3329 continues to cap recovery attempts, while the Relative Strength Index (14) at 28.4 slips into oversold territory, hinting that while selling pressure dominates, the downside could start to lose momentum tactically.

On the topside, initial resistance emerges at the prior downtrend break around 1.3329, followed by the more recent descending trend‑line break near 1.3444 and the clustered simple moving averages at 1.3466, which reinforce a dense supply area before the former support trend lines at 1.3516 and 1.3723. With no clear structural support levels mapped below the current price in this dataset, traders may instead look to psychological round figures and previous swing lows on the chart as potential demand zones until the pair can reclaim the 1.3329 area and start neutralizing the prevailing bearish structure.

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

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.76%1.11%0.27%1.07%1.26%1.06%0.76%
EUR-0.76%0.37%-0.47%0.31%0.50%0.31%0.00%
GBP-1.11%-0.37%-0.94%-0.05%0.13%-0.06%-0.36%
JPY-0.27%0.47%0.94%0.83%0.97%0.80%0.50%
CAD-1.07%-0.31%0.05%-0.83%0.24%-0.03%-0.31%
AUD-1.26%-0.50%-0.13%-0.97%-0.24%-0.19%-0.56%
NZD-1.06%-0.31%0.06%-0.80%0.03%0.19%-0.30%
CHF-0.76%-0.00%0.36%-0.50%0.31%0.56%0.30%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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