Cable Extends Its Winning Streak
GBP/USD has advanced for eight consecutive daily closes, rising from around 1.3150 to test a key technical area near the 200-day Exponential Moving Average. The 50-day EMA is positioned just below, while the 1.3400 level sits immediately above, creating an important resistance zone for Cable.
Monday Adds Another Gain
On Monday, the pair held near 1.3350 during the London morning before gaining momentum through the afternoon. The move eventually stalled just below 1.3400, but the session still reinforced the recent upward trend in Sterling against the US Dollar.
The Dollar Fails to Regain Control
The most notable element of Monday’s trading was that GBP/USD continued to climb despite several factors that could have supported the Dollar. A hawkish Federal Reserve governor spoke during the afternoon, US services data remained firm enough to keep the rate-hike debate alive, and yet Cable still pushed higher. That suggests the move was driven less by fresh strength in the Pound and more by a Dollar struggling to find new support.
Fed Expectations Lose Momentum
The Dollar’s late-June rally had been built around the hawkish debut of the new Fed Chair. That trade began to unwind after the June Nonfarm Payrolls report showed only 57K jobs, well below expectations of more than 100K. Rate markets now price roughly a three-in-four chance that the Fed holds in July, while discussion of another hike has cooled. Monday’s softer composite activity survey did little to revive Dollar demand.
UK Politics Move Toward Resolution
Sterling’s recovery also reflects a calmer political backdrop in Westminster. The Prime Minister announced his resignation on June 22, and GBP/USD bottomed near 1.3150 two days later as uncertainty peaked. Since then, the leadership process has become more orderly, with possible challengers stepping aside and the cabinet aligning behind Andy Burnham.
Leadership Timeline Comes Into Focus
Nominations for the leadership race open Thursday and close on July 16. If the race is uncontested, a new Prime Minister could be installed as soon as July 17. Markets initially punished the political vacuum, but are now pricing in a smoother transition, even though Andy Burnham’s economic platform remains largely undefined.
Bank of England Supports Sterling
The Bank of England remains another quiet source of support for the Pound. The BoE held interest rates at 3.75% on June 18 in a 7-2 vote, with both dissenters favoring a hike to 4.00%. The hawkish camp has doubled since April, giving Sterling a policy profile that differs from many other major currencies.
Inflation Keeps the Hike Case Alive
UK inflation currently stands at 2.8%, but the Bank of England projects it will rise back above 3% by autumn as war-era energy costs feed through. Sell-side expectations for the next hike are clustered around late 2026. Even so, the recent collapse in crude oil prices could weaken the argument for tighter policy if it continues to improve the inflation outlook.
Key Events Before Friday
The Financial Stability Report is due Tuesday at 09:30 GMT, followed by another appearance from a hawkish external Monetary Policy Committee member at 14:15 GMT. On Wednesday, the June Federal Open Market Committee Minutes will be released at 18:00 GMT. A hawkish interpretation of those minutes would be the clearest threat to the GBP/USD rally, since the Dollar side has driven much of the recent move.
Thursday Brings More Triggers
Thursday will open the UK leadership nomination window and include remarks from a BoE deputy governor at 09:30 GMT. US jobless claims are also due at 12:30 GMT, with consensus near 220K. These events could determine whether Cable can break above resistance or slips back into consolidation.
Resistance Levels to Watch
The first major resistance area is formed by the 200-day EMA and the 1.3400 handle, which are close enough to act as a single barrier. This zone has capped GBP/USD several times since May. A clear daily close above it would shift attention toward the late-June breakdown area near 1.3450, followed by the 1.3500 level.
Support Levels and Market Bias
Initial support sits near Monday’s base around 1.3350, followed by 1.3300 and then 1.3250. The original breakout area near 1.3150 remains the line separating a normal pullback from a broader reversal. The bias stays bullish while 1.3300 holds, with daily momentum indicators still in mid-range rather than overbought territory.
What Could Break the Streak
A daily close above 1.3400 would open the path toward 1.3450 and 1.3500. The main risks to the bullish setup are hawkish FOMC Minutes or the emergence of a credible challenger in the UK leadership race after Thursday. Without either development, dips in GBP/USD are likely to remain attractive to buyers.
