Sterling Outperforms Again: GBP/USD Pushes Past 1.354
While the majors chop sideways, one currency keeps quietly making higher highs: the pound.
GBP/USD closed Monday at 1.3547, up from 1.3491, and touched 1.3571 during the session. More telling is the cross: EUR/GBP has slipped to around 0.8540, its lowest since June, confirming that sterling’s strength is genuine and not just a mirror of dollar wobbles.
The UK rate advantage, quantified
The interest-rate gap between the UK and the eurozone remains the widest in the G10, and UK inflation — while off its peak — is still running hotter than the ECB’s comfort zone. For carry purposes, sterling is the gift that keeps paying. Every week the BoE holds and the ECB hesitates, the pound collects.
The market is now pricing less than a 30% chance of a UK rate cut before year-end. If UK wage data due Thursday confirms sticky pay growth, those odds shrink further and 1.3600 comes into view.
Risks to the rally
Three, in order of seriousness. One: the broad dollar shock — if USD/JPY breaks 155 again and takes the whole complex down, sterling gets hit regardless of its own story. Two: a UK data miss; at these positioning levels, even a soft CPI could trigger 200 pips of profit-taking. Three: month-end flows late next week, which historically favor dollar buying.
Trade it: longs from lower levels keep trailing. New entries wait for either a dip toward 1.3420 or a clean break of 1.3570. Momentum and patience — the two don’t usually coexist, but sterling is offering both right now.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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