APREX · EST. 2026
What is driving the move
The GBP/USD strength seen over recent weeks rests on an interplay of dollar weakness and British macro resilience. The DXY index has been under pressure since early August, driven by speculation that the Federal Reserve is approaching a pivot — a narrative that injected fresh energy into higher-beta G10 currencies with sensitivity to risk appetite, including sterling.
On the UK side, inflation figures have remained stickier than expected. UK CPI for July showed core inflation still exceeding the Bank of England's 2% target, reducing the likelihood that the BoE will cut aggressively in the near term. The rate differential between 2-year UK gilts and US Treasuries has moved in sterling's favour for much of August, according to Refinitiv data.
The risk-on tone across broader markets — with the S&P 500 near year-to-date highs and BTC at $78,585 with the Fear & Greed Index at 74 — is supporting demand for higher-beta G10 currencies such as GBP. When risk appetite is strong, investors have historically sold defensive USD and rotated into assets including sterling.
The past three trading days have been characterised by consolidation rather than trend, but this is not necessarily a negative sign. A sideways pause following a strong rally allows the technical picture to "clean up" — overbought indicators normalise, and moving averages rise to catch up with price. This is precisely what we are seeing with the 100-hour MA now at 1.3632, narrowing the gap to spot.
The volume profile throughout the consolidation phase has been moderate with no signs of distribution by large players, which according to the ForexLive analysis (Greg Michalowski) indicates that buyers are retaining control rather than the market topping out.
Key figures
Currency overview — Sterling's context within G10
Sterling is not alone in challenging the dollar this month. EUR/USD has stabilised above 1.08 after pressure earlier in the summer, while AUD/USD and NZD/USD have also recovered in line with improved risk appetite. Nevertheless, GBP stands out with clearer momentum:
GBP/JPY has risen significantly, reflecting a dual effect of pound strength and yen weakness, even though yen volatility remains elevated following the Bank of Japan's policy signals this summer.
GBP/EUR (or EUR/GBP inverted) has moved in sterling's favour as the Eurozone's growth outlook continues to disappoint relative to the UK. EUR/GBP is trading below 0.8450, near its lowest level since early 2026.
EM currencies: The Turkish lira and South African rand have remained relatively stable this week. The Brazilian real has shown some volatility tied to local rate expectations, but EM currencies overall have benefited from the weaker dollar.
For GBP/USD specifically, it is worth noting that the widely followed 200-hour MA is now around 1.3587 — this level acted as a key turning point on August 13, when the pair bounced from precisely that moving average and initiated the most recent trend-like move higher, according to ForexLive data.
On August 13, GBP/USD bounced precisely from the 200-hour MA at 1.3587 — that level is now the ultimate support for the bullish bias.
Technical picture
Support and resistance levels
| Level | Type | Comment |
|-------|------|---------|
| 1.3774 | Resistance | September 2025 swing high |
| 1.3725 | Resistance | June 2025 swing high |
| 1.3674 | Resistance | Friday August 22 (fresh) |
| 1.3652 | Local high | Upper end of today's range |
| 1.3642 | Spot | Current trading level |
| 1.3632 | Support (dynamic) | 100-hour MA — rising |
| 1.3623 | Support | Bottom of today's range |
| 1.3617 | Support | Friday's low |
| 1.3587 | Support (critical) | 200-hour MA — rising |
Technical indicators
100-hour MA (1.3632): Rising, functioning as the short-term bullish barometer. Buyers have defined their risk against this level — a sustained break below it would not necessarily trigger a sharp decline, but would signal a shift in short-term bias.
200-hour MA (1.3587): The most important moving average in the technical picture. As long as this holds, the overall short-term trend remains intact. A sustained break below this level would be a more serious technical signal.
RSI (hourly chart): After Friday's high, RSI was moderately overbought, but the three subsequent consolidation days have brought the indicator back to neutral territory — which technically creates room for a fresh advance without immediately encountering extreme overbought conditions.
Momentum/MACD: The MACD histogram remains positive on the 1-hour chart, but is fading somewhat in line with the consolidation. A renewed upturn would confirm a fresh impulse move toward 1.3674.
The range contraction (29 pips today) is itself a technical signal: compressed ranges precede breakouts. Combined with rising MAs below price, the technical picture argues that the direction of any eventual break is upward.
What to watch
Jackson Hole aftermath: Fed Chair Powell's signals from the Jackson Hole symposium will continue to influence dollar pricing and therefore GBP/USD indirectly. Markets are continuously repricing the Fed rate-cut path — any stronger-than-expected US data could give the DXY a temporary boost that pushes GBP/USD back toward the 100-hour MA.
UK BRC Retail Sales Monitor (August 26): UK consumer data could generate short-term volatility in sterling. Positive figures would strengthen the case for BoE on-hold and provide tailwinds for the pound.
US PCE deflator (Friday, August 29): The Fed's preferred inflation measure. A surprisingly strong PCE reading could broadly strengthen the USD and threaten the GBP/USD consolidation. A reading in line with expectations or softer would likely support continued pound strength.
Price levels to watch:
- 1.3674: A break and hold above this triggers the next upside target
- 1.3725–1.3772: The 2025 swing resistance zone — the technical "wall" area
- 1.3632: 100-hour MA — a sustained loss of this level shifts short-term bias
- 1.3587: 200-hour MA — this is the bulls' last line of defence
- 1.38688: The January 2026 high — the ultimate upside scenario in the event of sustained dollar weakness
Bulls are defining their risk against 1.3632. As long as this holds, the foundation for the next leg higher remains intact.
Sources: ForexLive/Greg Michalowski (investinglive.com), Refinitiv, Bank of England, 24markets research desk. Data as of August 25, 2026.
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