Sterling has climbed to a two-week high near $1.3350, but it keeps stalling below 1.3400 — the 200-day moving average that has capped every rally. A soft U.S. jobs report and a hawkish Bank of England lifted the pound, yet the breakout depends on the dollar staying weak.
The pound changed hands near $1.3350 into Monday, having rallied roughly 1.3% over the past week to a two-week high before stalling just below the 1.3400 ceiling. Cable — the market's nickname for GBP/USD — has recovered from its June low of 1.3165, climbing about 1.72% off that bottom as a soft U.S. jobs report knocked the dollar down. But the bounce is a recovery within a range, not a breakout: the pair spent 2026 trading between roughly 1.3165 and 1.3817.
The 1.3400 wall caps every rally
Every forecast runs through one level. The 200-day simple moving average sits around 1.3400, lining up with trendline resistance from the late-May highs and a cluster of prior lows. A clean break above it would open the path toward 1.3543 and the mid-1.30s, where the more optimistic bank forecasts sit.
Momentum, however, is flashing caution. The pair trades above its 8-day and 21-day exponential moving averages, a short-term bullish tilt, yet the RSI is drifting toward the 50 midline and the MACD line has crossed below its signal line — a bearish signal suggesting the push is easing right at resistance.
Soft U.S. jobs did the heavy lifting
The rally came almost entirely from the dollar side. Nonfarm payrolls rose just 57,000 in June, roughly half the expected 110,000 and the smallest gain in four months. That miss prompted the market to cut the odds of a September Fed hike to roughly 50% from around 66%, and sterling rose by default as the greenback sold off.
A hawkish Bank of England at sterling's back
The pound has its own support. The Bank of England held Bank Rate at 3.75% on June 18 in a 7-2 vote, with both dissenters voting to raise rates to 4%. The BoE is leaning hawkish because of inflation, specifically services inflation, which rose to 3.7% in May even as headline inflation came in at 2.8%. At the Sintra Forum, Governor Andrew Bailey struck a moderately hawkish tone, declaring that rate cuts are currently "off the table" despite easing energy prices.
With BoE and Fed rates nearly level, GBP/USD trades primarily on dollar direction. The July 28-29 Fed and July 30 BoE meetings land a day apart, and the source calls them the dominant near-term driver that will likely force the resolution. For now, Cable is at the wall, and the wall is 1.3400.
Source: Investing.com Australia
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