British Pound trades near three-month top as fading Fed hike bets undermine USD
- GBP/USD trades with a positive bias for the second straight day amid a broadly weaker USD.
- Receding Fed rate hike bets counter geopolitical risks and keep USD bulls on the back foot.
- Traders now look to this week’s UK macro releases and FOMC Minutes for a fresh impetus.
The GBP/USD pair attracts some dip-buyers at the start of a new week and climbs above mid-1.3500s during the Asian session, closer to over a three-month high touched on Friday. Moreover, the prevalent US Dollar (USD) selling bias favors bullish traders and suggests that the path of least resistance for spot prices remains to the upside.
The US inflation data released last week painted a picture of moderating price pressures. Moreover, data released on Friday showed that US Retail Sales fell 0.6% in July, marking the biggest monthly fall since May last year and pointing to a slowdown in consumer spending. Traders were quick to react and further tempered their bets for an immediate interest rate hike by the US Federal Reserve (Fed). The outlook, in turn, keeps USD bulls on the defensive and acts as a tailwind for the GBP/USD pair.
The British Pound (GBP), on the other hand, draws support from last week's upbeat UK GDP report, showing that the economy expanded 0.3% in June. This puts the UK on course for the strongest growth among the G7 economies in the first half of 2026. For the second quarter, the UK economic growth slowed from 0.6% to 0.4%. Nevertheless, the data backs the case for at least one interest rate hike by the Bank of England (BoE) in 2026 and validates the near-term positive outlook for the GBP/USD pair.
Analysts at MUFG/BTMU highlight that “the pound is continuing to perform well this year,” noting it has been “the best performing major currency so far in August with cable rising back above the 1.3500.” They add that sterling “has been supported by further evidence yesterday that the UK economy is proving more resilient than expected to the negative energy price shock triggered by the US-Iran conflict,” reinforcing the constructive backdrop for GBP.
However, the US-Iran standoff keeps the geopolitical risk premium in play, which, along with inflation risks stemming from volatile oil prices, helps limit deeper USD losses. Traders might also opt to move to the sidelines ahead of this week's release of UK jobs data and consumer inflation figures, due on Tuesday and Wednesday, respectively. Apart from this, FOMC Minutes on Wednesday should provide a fresh impetus to the GBP/USD pair and infuse volatility during the second half of the week.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.13% | -0.17% | -0.04% | -0.10% | -0.25% | -0.19% | |
| EUR | 0.09% | -0.07% | -0.09% | 0.03% | 0.00% | -0.17% | -0.10% | |
| GBP | 0.13% | 0.07% | -0.02% | 0.09% | 0.08% | -0.11% | -0.04% | |
| JPY | 0.17% | 0.09% | 0.02% | 0.13% | 0.07% | -0.08% | 0.00% | |
| CAD | 0.04% | -0.03% | -0.09% | -0.13% | -0.06% | -0.22% | -0.14% | |
| AUD | 0.10% | -0.00% | -0.08% | -0.07% | 0.06% | -0.15% | -0.13% | |
| NZD | 0.25% | 0.17% | 0.11% | 0.08% | 0.22% | 0.15% | 0.07% | |
| CHF | 0.19% | 0.10% | 0.04% | -0.01% | 0.14% | 0.13% | -0.07% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
